Financial advisers face challenging times ahead with investors continuing to rebalance their assets towards cash and overlooking other asset classes that could provide benefits from a market upswing.
Advisers are aware that if clients hold cash as a long term strategy then inflation is going to erode the value of that cash, Coredata head of advice, wealth and super Kristen Turnbull told InvestorDaily.
She said advisers can only make sure their clients are informed and educated about their options.
"I guess the advisers are in a bit of a tough position to a certain extent because they're going to have to wait for their client to sit it out while making sure that they are aware of what their options are and the downside of keeping cash as a long-term strategy," Turnbull said.
She explained that the most sensible approach would be for advisers to recommend that their clients "are dripping money" in rather than putting large sums of cash in the market.
"I don't think anyone is diving in there and looking to divest all their cash in one go. But I think the best thing the clients can be doing is help their clients average in over time so that they're not missing out on an upswing when it does come," Turnbull said.
"There is a little bit of dipping the toe in the water and seeing.
"At the moment, people can see the expectation for cash is not as good as it was, but they still can't find a viable alternative that they are comfortable from a risk perspective."
