For goodness sake 

Suddenly, I am deluged by advertisements for conferences and resources to help me survive "Brexit and the looming crash".  One I received today claimed to show me how to "explode your business and investments and be the last man standing as the economy goes into bunker mode".  You can access a typical example of the kind of thing I mean by clicking here...if you have a thick skin for overblown claims and a kind of armageddon-ish prophetic tone that is designed to condition you into a state of anxious dependence.

Personally, I don't find the prospect of 'exploding' businesses and investments any more appealing than the imploding ones that littered the residue of our economy, during the last major financial crisis.  Perhaps I am just more than slightly averse to that kind of excitement.  A 'slow 'n steady' business model which was realistic about risk served us very well during the last major financial catastrophe - so even if the outcomes from Brexit are being accurately predicted by the doom-mongers, I see little reason to drift into a kind of end-of-the-world scenario, much beloved of nihilist Hollywood film-producers.  For such business models generally require radical changes in strategy, and good financial-planners generally operate a careful, steady-as-you-go model, the direct antithesis of what these self-professed gurus tend to advocate.

Of course, as an aside, I think it reasonable to question the kinds of assertions present in the promotional materials issued by these predicters of economic meltdown:  it seems that there is an unhealthy dynamic going on between the kind of ideology that was never going to favour Brexit, and the kind of opportunism that is all-too prevalent in the pronouncements of these gurus.  Given that may well be what is going on, established IFA practices need to take care to avoid being panicked into radical changes of approach - especially when our own internal disciplines would tend to protect both us and our clients from adverse financial conditions.

So what are those internal disciplines?

  • The proactive control of leverage, and systematic debt-reduction strategies - for your own business, and for your clients
  • Working on good quality financial data - for your own business, and for your clients
  • A clear, informed and realistic assessment of risk - for your own business, and for your clients
  • A strong emphasis on cashflow - for your own business, and for your clients
  • Building a strategy for a profitable business which diversifies revenue streams
  • The maintenance of adequate cash reserves - for your own business, and for your clients

No rocket science here, is there?  It seems to me that 'risk' (however you define it) tends to escalate when Advisers are suckered into significant changes in approach, often without fully investigating the implications.  The Hairy Armageddon Gurus (or Hags, for short) may only charge £97 up front for their seminars, but they'll then put you under pressure to buy into some other, much more pricey, programme - and once bought, you'll feel the need to use it.  Even if the reality is that nothing has changed - the old truths and insights work just as well in more volatile markets, because they've been tested over 20 or 50 years of variable conditions.

Let's be careful out there, folks.

Some useful resources from Dimensional...