A new survey of financial planners revealed which assets they recommend most to their clients — and how those recommendations have shifted over time.
The 2024 Trends in Investing Survey conducted by the Journal of Financial Planning and the Financial Planning Association (FPA) showed that exchange-traded funds (ETFs) continue to be the investment vehicle that is most recommended and used by clients.
The survey found that 88.4% of planners recommend ETFs, although that’s down slightly from in 2023, when 90.1% of financial planners preferred the asset class.
Meanwhile, 60.1% of financial planners said they expect ETF usage to increase in the next 12 months — compared to the 49.7% of them who said that in 2023. On the other hand, only 1.9% expect to see a decrease in ETF usage in the next 12 months.
Cash isn’t king, but it is popular
Cash and cash equivalents like money market funds are second on the list of preferred investments. The percentage of planners who say their clients hold cash is 81.3%, up from 76.4% in 2023.
Of course, that’s not surprising as more investors have sought the safety of cash in a high-interest-rate environment and what was expected to be a sluggish market after last year’s huge bull-market rally.
However, the stock market has actually been stronger than expected, and that may be why fewer planners are recommending cash this year. Just 19.2% said they are recommending that their clients hold more cash, compared to 24.1% in 2023.
On the other hand, 29.3% of financial planners are telling clients to reduce their cash positions, compared to just 13.6% a year ago.
Stocks, bonds and mutual funds
The survey also found that the percentages of planners recommending mutual funds, individual stocks and individual bonds all went up in 2024.
Specifically, 68.3% recommended mutual funds, up from 63.9% last year. Meanwhile, 53.4% of planners recommended stocks, up from 50.8%, and 50% suggested investing in bonds, up slightly from 47.1% a year ago.
In addition, 26.9% of planners suggested increasing usage of bonds over the next 12 months, compared to 23.6% in 2023. Further, 26.4% recommended increasing stock holdings this year, up from 18.3% a year ago. Finally, 16.4% suggested increasing investments in mutual funds over the next 12 months, up from 14.1% a year ago.
Of the three asset classes, mutual funds had the highest percentage of financial planners recommending a decrease in those investments, at 30.3%. However, that was up from 25.7% in 2023.
This shows that mutual funds continue to fall out of favor compared to ETFs. Further, 20.2% of financial planners recommended reducing stock holdings in 2024, compared to 15.2% a year ago, while 13.5% suggested reducing bonds, up from 10% in 2023.
Crypto and the economy
The analysis also revealed slightly more interest among financial planners in recommending cryptocurrency to clients, although the numbers remain low. Specifically, 4.8% of them recommended cryptocurrency, up from 2.6% in 2023.
However, while 4.8% of planners suggested increasing crypto allocations (up from 3.1%), 7.2% recommended decreasing crypto investments, compared to 4.7% a year ago.
Finally, financial planners are more bullish on the economy this year compared to last. On a scale of one being bullish and five being bearish, the median outlook for planners over the next six months was 2.5, compared to 3.3 in 2023.
For the next 12 months, the outlook stands at 2.6 versus 2.9 a year ago. Meanwhile, for the next five years, the score is again right in the middle at 2.5.
The 2024 Trends in Investing Survey was conducted from March 4 to April 3 and polled 208 financial planners.
