Investor attitudes towards gearing are becoming increasingly polarised, according to research firm Investment Trends. However, Mark Johnston, principal of the firm, does not believe recent high-profile blowups in the margin lending area will shape consumer attitudes towards planners or advice.
“The more sophisticated investors will tend to just brush it aside, so it won’t really affect their view of their adviser or advice in general,” he says.
“The more actively engaged investors have really polarised in terms of their views on gearing as a rule. You have a group who say: ‘I’m very wary of using borrowing strategies to invest’ and that group is larger than it was before.
At the other end you have quite a few people who say the fall in the value of all of these assets at some point will create an opportunity and borrowing will be a good strategy to reap the rewards of that. What we’ve seen though is that most of the people who hold that view don’t hold it very strongly; they’re not necessarily ready to borrow just yet.”
Investment Trends’ October 2008 Planner Business Model Report shows 76 per cent of planners advise on margin lending or gearing.