Wake up to a new world 

Well, that was a shock.  I have spent weeks labouring under the illusion that, despite all our sabre-rattling, in the end the electorate would vote to stick with the devil they knew, rather than venture forth into the unknown.  But venturing forth is exactly what's in store for us.

Already my inbox is filling up with emails from investment providers, purporting to offer predictions as to what this new future is going to look like, and supplying guidance or reassurance in equal quantities in respect of the rather tricky matter of the interim.

Of the future, none of us actually have the foggiest clue - so the offering of reliable insights is somewhat akin to snake oil salesmanship.  It is in respect of the interim, however, that both we and others might actually be more useful.  As IFAs we might perhaps emulate the approach of our leading politicians - not, perhaps, by resigning but rather by seeking to provide our clients with a safe pair of hands.  

Everybody is talking about volatility.  The FTSE All-Share dropped by 306.5 points in the first ten minutes of trading today, but has been subsequently plotting a somewhat uncertain recovery.  At the time of writing it is still down by 178 points, and perhaps we might reasonably expect this kind of oscillatory behaviour in markets over the coming months, as they respond to the various kinds of fallout which all of us expect.  So what can we do for our clients?

  • Reassure them:  this is not the end of the world, in a kind of Hollywood disaster epic format.  It's a big change, admittedly, but there have been plenty of those over the decades since we first joined the EU.  Who remembers a previous episode back in 1992?
  • Educate them:  at ValidPath, we've been saying for years that the effective use of risk-profiling systems (such as Finametrica) encourages an open discussion about the nature of risk, its consequences, and our responses to it.  IFAs who use these things as a kind of black-box solution to engineer an investment outcome are missing a trick - this is about the conversation that we can have with our clients, and we can manage this on a global basis (newsletters, blogs etc) as well as on a one-to-one basis;
  • Protect them:  imperfectly, and within the kinds of constraints which govern us, we can assist our clients in controlling risk;
  • Review them:  don't leave them on their own, especially at this time, given that anxiety levels may be stratospheric (perhaps depending upon one's political views).  If clients are due a review, then don't delay.  If they are not - then offer one.
  • Encourage them:  if Brexit is a vote for the nation to cut loose from Europe and 'go it alone', how much more now a person's financial wellbeing is their own responsibility, rather than a kind of dependency within the State provision.  In the current market, any approach to financial-planning which is passive (as in an 'order-taker' model) is almost wholly inadequate.

It is a new world out there, but that just means that there's more for us to do, folks!

Kevin Moss, 24/06/2016