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Victoria Tait is a senior journalist with IFA, a Morningstar publication.

Financial planners, wearied by four years of staring down volatile financial markets, are steering ever larger slices of clients' money into cash and term deposits.

Australia's dash for cash could be attributed to high interest rates here relative to the rest of the world. However, if industry comments and recent survey results are anything to go by, there is no trick to asset allocation in these troubled times.

"With the European crisis still not resolved and the effect on the world economy, even those who have a longer-term risk profile of, say, a balanced or growth investor, we're still recommending that they remain very conservative at this stage of the year and maybe all of this year," Synchron director John Prossor says.

What portion of a very conservative portfolio sits in cash and term deposits?

"All of it," Prossor says.

"We're not trying to pick the right time to go in. We think markets could still go down by a substantial amount over the next six months - maybe longer."

The latest World Bank report appears to vindicate the caution exhibited by Prossor and others.

In its latest "Global Economic Prospects" report in June, the World Bank cut its global economic growth forecast to 2.5 per cent from 3.6 per cent. World Bank global economics team head Andrew Burns says a lot has changed in six months.

"This is going to be a very difficult year," Burns told reporters.

Prossor notes financial markets have been in turmoil for more than four years.

"I don't like saying it's different this time, but it's certainly more severe than we've experienced in our working lives as financial advisers," he says.

Asked whether clients worried about missing out on an upturn, he says they were concerned for a year or two but the concern has given way to fatigue.

"They're now so battle-worn, they're saying 'just leave it in cash'," he says.

Cash on the sidelines

Investment Trends' recent survey of nearly 1000 financial planners shows they expect domestic equities to return a meagre 3 per cent in 2012.

"Basically, return expectations have collapsed," Investment Trends senior analyst Recep Peker says.

"People are going to cash and term deposits because they don't expect markets to perform well."

As a result, the proportion of new client money allocated to cash and term deposits rose sharply in the five months to June, according to the "Investment Trends November 2011 Adviser Product and Marketing Needs Report", released earlier this month.

The market research group's survey of 966 planners across Australia shows 28 per cent of new client money went into cash and term deposits as of November, up from 18 per cent in June and 16 per cent a year earlier.