With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down around 3% since the beginning of calendar year 2016, investors are obviously faced with a difficult environment.

One of the primary causes of the negative market returns so far this year has been the weak performance of stocks across the financial sector.

This weak performance has been led by the four major banks that are all down around 15%. While these falls have tempted some investors to buy bank shares, given the outlook for the banking sector and the complicated task of assessing the banks’ underlying businesses they are arguably best avoided by many investors.

Amongst the wider financial service sector stocks there could be attractive investment opportunities however…

Two stocks which could deserve a place on your watch list are AMP Limited (ASX: AMP) and Platinum Asset Management Limited (ASX: PTM) which are down 10.5% and 26% respectively.

…but are they cheap enough to buy?

According to data supplied by CommSec, AMP is trading on a forecast price-to-earnings (PE) multiple of 13 times. AMP is a slightly tricky company to value due to its insurance operations which generally trade at a lower multiple compared with wealth managers.

For example, insurance peers such as Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE) also have forward PEs of roughly 13 to 14 times. In contrast, a large wealth firm such as BT Investment Management Ltd (ASX: BTT) is trading on a forecast multiple approaching 15 times.

Meanwhile, Platinum is trading on a forecast PE multiple of 15 times. This compares with peers such as Magellan Financial Group Ltd (ASX: MFG) on 19 times (source: Reuters).

While Platinum’s multiple could at first glance appear tempting it’s important to consider the “key man risk” associated with the stock. Founder Kerr Nielson is a major asset of the business and despite having built up a depth of talent in the firm it remains unknown what his eventual departure from portfolio management could mean for the funds under management (FUM) of Platinum.

Why these 5 dividend shares are better bets than the banks

Discover The Motley Fool's top 5 ASX dividend stock ideas for 2016 to get you started building a more diversified income portfolio that is paying you back!

The report is free! No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.