Three quarters of financial advisers avoid complex investments, according to new research.

Over half (51%) said they do not recommend complex investment products due to lack of confidence in their ability to deliver.

Some 1 in 10 advisers surveyed for Aegon UK’s Adviser Attitudes Report said they do not recommend complex investment products due to the difficulty of explaining them to clients.

A roughly equal number of advisers (12%) said they were too expensive.

Among advisers who used complex investments, they made a positive case for the products on suitability grounds (8%), their ability to deliver on objectives (6%) or due to their ability to explain the products (6%).

According to the report, the introduction of PROD and MIFID II has impacted advisers' views on complex investments. Under the rules advisers must clearly demonstrate how an investment strategy meets the client’s needs.

Richard Whitehall, a head of portfolio management at Aegon, said he was not surprised that many advisers turn their back on complex investments.

He said: “A raft of absolute return and complex products launched following the 2008 financial crisis and have struggled to compete with more conventional multi-asset strategies in the long, bull market that followed. The volatility caused by the outbreak of Coronavirus appears to have been short-lived, and so didn’t help the case for complex solutions.

“The fact that advisers have turned their back on complex investments doesn’t come as a surprise in the current environment. While they’re aiming to do very different things, looking at the risk and return profile of absolute return strategies alongside simpler, multi-asset portfolios, what worries me is the dispersion of returns and risk in the sector.

“It’s my belief that today’s investors are a great deal more cost conscious and want to see value for money from their investments. At this point in time, it’s hard to see this coming from complex investments.”

• Opinium surveyed 251 UK financial advisers on behalf of Aegon UK.