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New research by Liverpool Victoria Friendly Society’s LV= business has revealed that almost nine out of ten (87 per cent) financial advisers (IFAs) believe that markets will remain turbulent over the next few months.

The survey questioned 250 financial advisers about market confidence. The research supports the FSA’s recent statement which says that there is a “very real prospect” that conditions could worsen in the first few months of 2008, with the effects of the global credit crunch set to kick in.

Just a third (31 per cent) of financial advisers believe that equity markets will go up rather than down over the next year.

In line with this, just over a third (36 per cent) of advisers said that they are advising their clients not to take on more investments in equity-based markets.

Four out of ten (44 per cent) financial advisers are believed that the housing market will take a downturn in the next six months, with less than a fifth (19 per cent) having an optimistic view of housing market performance.

Investments will remain a core part of advisers’ business despite the loss in market confidence, with eight out of ten (79 per cent) advisers expecting investments to grow in importance within their business over the next five years.

Ray Chinn, head of pensions at LV= said that the FSA has already hinted that there could be tough times ahead over the coming year, as the true effects of the global credit crisis strengthens.

He added that it is not surprising with this in mind that so many financial advisers believe the next few months will be unstable, and that equity markets may take a downturn.

Chinn pointed out, however, that it is important to remember that financial advisers play a vital role in building people’s retirement portfolios through both good and bad times.

“Moreover, it is also vitally important that advisers have access to products that are relevant to the needs of today’s at and post retirement clients, offering a real range of investment options to suit different economic conditions,” he concluded.

Steven Daniels, managing director of LV= Asset Management added that investment markets have historically always encountered periods of turbulence on their long-term upward path.

He agreed that market volatility is likely to continue in the coming months. Nonetheless, he was confident that the economic outlook – the main cause of current concerns – should improve as expected interest rate cuts come through.

For clients holding long-term investment products Daniels did not see the current period of volatility as a cause for concern, assuming that their financial circumstances and goals have not changed.

“For those considering establishing or increasing their exposure to long-term investments, current market conditions may represent a good buying opportunity,” he said.

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