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10 Investments That Many Pros Are Recommending to Their Clients

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Despite ongoing unease about the possibility of a future recession, most financial planners are feeling optimistic about the economy this year, according to the 2024 Trends in Investing Survey. Conducted by the Journal of Financial Planning and the Financial Planning Association, the survey collected answers from more than 200 finance professionals who offer investment advice.

Looking to the future, these professionals expect to see an increase in the use of securities such as individual stocks and mutual funds. However, for now, here’s a look at the investment vehicles these pros currently use and recommend most often with their clients.

1. Exchange-traded funds

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Financial advisors who use or recommend this investment with clients: 89.42%

Also known as ETFs, exchange-traded funds combine elements of stocks and mutual funds. They can be easily traded, like stocks, and offer the benefit of a diversified portfolio, like mutual funds. What’s more, they typically have low fees and don’t require a minimum investment, which makes them a popular investment vehicle.

2. Cash and equivalents

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Financial advisors who use or recommend this investment with clients: 81.25%

Cash is sometimes considered a safe way to store money since it’s immune from stock market crashes. The problem with cash is that inflation will eat away at its purchasing power. That’s why you want to invest at least some of your money elsewhere.

3. Non-wrap mutual funds

Mutual funds
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Financial advisors who use or recommend this investment with clients: 68.27%

Within a mutual fund, you’ll find shares of many different companies. That diversification makes mutual funds less risky than individual stocks.

Non-wrap mutual funds are those that anyone can purchase, and we’ll talk about more complex mutual fund wrap programs in just a moment.

4. Individual stocks

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Financial advisors who use or recommend this investment with clients: 53.37%

The idea of owning a piece of your favorite company can be enticing. But make no mistake: Individual stocks can be volatile, with prices fluctuating wildly depending on the news of the day. That may be why only about half of financial planners advise buying them.

5. Individual bonds

Series I U.S. government savings bonds
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Financial advisors who use or recommend this investment with clients: 50%

Just as you can buy individual stocks, you can buy individual bonds. While U.S. Treasury bonds may be best known, investors can also purchase municipal bonds, corporate bonds and other similar securities.

6. Separately managed accounts

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Financial advisers who use or recommend this investment with clients: 36.06%

Separately managed accounts are typically geared toward those with a high net worth. An asset management firm helps investors select a mix of securities based on their financial goals. These portfolios can offer diversification similar to what you would find in a mutual fund or ETF, but investors own individual securities instead.

7. ESG funds

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Financial advisers who use or recommend this investment with clients: 34.62%

Environmental, social and governance (ESG) investments are favored by socially conscious individuals who want to keep their money in companies that share their beliefs. These funds may include shares from businesses that are focused on issues such as sustainability, fair labor practices or ethical governance.

8. Variable annuities

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Financial advisors who use or recommend this investment with clients: 30.77%

Nearly one-third of financial planners use, or have advised their clients to purchase, a variable annuity. These insurance products involve making an upfront payment, or a series of regular payments, that will result in a stream of income. That income could start immediately or, in the case of a deferred annuity, at a later date.

9. Fixed annuity (tie)

Woman calculating her annuity payment
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Financial advisors who use or recommend this investment with clients: 29.81%

Like variable annuities, a fixed annuity provides a stream of income in exchange for a large upfront payment. As their name suggests, fixed annuities have a fixed rate which results in predictable payments.

9. Mutual fund wrap programs (tie)

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Financial advisors who use or recommend this investment with clients: 29.81%

Typically offered by full-service brokerages, mutual fund wrap programs can provide access to advice and funds not otherwise available, with the costs “wrapped” into a single or fixed fee.

But beware of those fees. They can be higher than those for other investments, and the U.S. Securities and Exchange Commission issued an alert in 2021 about improvements that could be made in these funds’ disclosures.

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