Although European debt remains the number one cause of concern for advisers it has decreased (from 70% to 63%). However, unemployment has jumped from 9.3% to 15% and government spending cuts is up from 5.5% to 8.1%. 

Since the survey began in Q1 2011 there has been a steady increase in the number of adviser who believe inflation will go down. This time last year, just 11% of advisers thought inflation would go down, but now, 66% of advisers believe inflation will decrease. Likewise with interest rate predictions, a massive 70% of advisers currently feel interest rates will stay at 0.5%, this is a complete turnaround from a year ago when only 14% believed interest rates would stay as they are, the majority felt they would rise.

Emerging markets continues to be the sector most advisers believe will offer the best investment returns over the coming 12 months with 30% of all votes. There has been a big jump to second place, with North American equities taking 16% of the votes, which is nearly four times greater than it was in Q4 at 4.3%. Gold saw the biggest fall, down to just 6% from 12% in Q4.

Peter Mann, chief executive of Skandia UK, comments:

“Financial advisers are a good barometer when it comes to market sentiment. The 13% improvement in adviser confidence is great news, and we could be seeing the first green shoots of renewed optimism. Market volatility and uncertainty can often bring opportunities, and advisers should focus on ways to position themselves and their clients for any potential market bounce back.

“High unemployment is clearly a growing area of concern among advisers, and unfortunately the recent unemployment report will do little to dampen those fears. The latest inflation figures show a small decline, perhaps an early sign of the effect Government spending cuts and high unemployment is having on consumer spending.”

* Skandia’s Q1 2012 Adviser Confidence Barometer survey, 996 responses, 13 February 2012.

To view a PDF of Skandia's Q1 2012 Adviser Confidence Barometer, click here.