Offshore financial advisors’ economic confidence fell in the third quarter of this year from the previous three months although Asia-based advisors were far more upbeat than their Western counterparts, a survey showed.

Since the third quarter of 2011 offshore financial advisor confidence has dropped by 14 per cent, despite generally positive outlooks from Asia-based advisors. Clients’ willingness to invest still remains, however, according to Skandia’s International’s Advisor Confidence Barometer.

Advisors based in Singapore were surveyed as having the greatest confidence in their local economies, giving ratings of 6.7 out of 10 on average. UK-based advisors marked the other end of the scale, having the least amount of confidence in their local economies, with 4.6 out of 10 as their average rating.

Offshore financial advisor confidence in the global economy was rated 5 out of 10, slightly underperforming confidence levels in advisors’ local economies, which were rated at 5.3 out of 10. These figures declined from the previous quarter’s ratings of 5.4 out of 10 for the global economy and 6.2 out of 10 for local economies, Skandia said.

Despite these decreases in confidence, 13 per cent of offshore advisors reported an increase in the number of clients wanting to make regular investment contributions: 7 per cent saw higher demand for lump sum investments, and 97 per cent of respondents confirmed their clients were continuing investing rather than trying to sell investments and cut their losses.

“This last temperature check was only taken a few weeks ago, when markets were exceptionally volatile. Whilst it looks like the economic uncertainty is set to continue for some time yet, it is encouraging to see advisors’ confidence in their local economies remaining relatively positive,” said Phil Oxenham, marketing manager at Skandia International. 

“The fact that the vast majority of clients are waiting for the storm to pass rather than giving in and selling their investments shows that investors, with support from their advisors, are taking a pragmatic approach, recognising that successful investing can only be achieved over the longer term,” he said.

UK-based advisors were the only group polled to consider the global economic outlook more positively than their own local economies.

For the second quarter in a row, a third of offshore advisors said that global contagion is the greatest economic threat to their local markets. Some 40 per cent felt that rising unemployment and inflation levels could also have a imminent impact.

55 per cent of advisors feel their clients have become more risk averse over the past three months. This is up from 37 per cent last quarter, while 47 per cent report that their clients are reluctant to invest at all. Europe-based advisors say their clients have become more risk averse, at 65 per cent, while 61 per cent state their clients were unwilling to invest at all.

Only 4 per cent of respondents felt their clients were prepared to take on more investment risk, down from 17 per cent last quarter. Half of all surveyed advisors stated their clients chose to invest less during the last quarter.

The Offshore Adviser Confidence Barometer research was conducted by Skandia International, part of the wealth management business of Old Mutual. The firm surveyed 450 advisors from Hong Kong, Singapore, Dubai, the UK, Europe, Africa, and Latin America.