Last week, coronavirus fears led to markets worldwide crashing to their worst week since the financial crisis. Although markets have risen at the start of this week, the intense volatility is prompting many clients to contact their advisers.
New Model Adviser® spoke with five IFAs about how clients are reacting to the sudden COVID-19 led drop in world markets, what they are advising clients and what, if any, investment changes they are making to stem the bleeding.
Jill Thomas, managing director of Sheffield-based Future Life Wealth Management
Are your clients concerned?
On the whole, my clients aren’t concerned, no. We work hard to get the monies in the right place, at the right time, and sit monies in cash for income payments to be made for the upcoming 12-18 months. Having sent a couple of briefing notes to clients, we have had a handful contact us, who just prefer to talk matters through with us.
Many clients have used this pullback to get monies into the investment markets, at a more competitive unit price – be aware that we may still see volatility. Establishing phasing in at this time has also been a methodology we have deployed.
What advice have you been giving clients?
Keep calm and carry on. There is no doubt that there will be further reactions on the equity/investment markets, but the impact of this virus could, as long as your timeline allows, provide you with long-term fund performance growth.
Having worked with most of these clients for ten-plus years, they were waiting for contact from us to put monies into the investment markets coming up to fiscal year-end. Many of these clients understand the importance of long-term investing, investing whilst the markets are depressed, rather than at the top of the market.
Will there be a change in investment approach?
No, we will recheck the financial plan. Issues like the coronavirus assist in clarifying goals and it is important that we continue to diagnose before we prescribe.
Part of our house-view is that most of our portfolios rebalance on a quarterly or six-month basis, ensuring that monies are in the right place, at the right time during volatility is one of the most important elements to long term growth. This also ensures that there is an additional risk management function within the advice process.
David Bashforth, managing director at Dronfield-based Belmayne IFA
Are your clients concerned?
It’s certainly been a concern! I’ve had a few phone calls from clients, however, I have not been swamped or inundated which I put down to the energy we put into preparing our clients at each annual review for such eventualities.
What advice have you been giving clients?
Having said that a couple of the clients who have contacted me have insisted on selling down to cash, directly against my advice, which is: keep calm, carry on, and stick to the plan.
Will there be a change in investment approach?
History is littered with uncertainty and market events, this being the latest of them. But like all downturns that have gone before, it will pass and clients need to remain invested when it does and the inevitable recovery occurs. My own money will remain invested throughout in accordance with my own financial plan.
Ricky Chan, director and financial planner at London-based IFS Wealth & Pensions
Are your clients concerned?
I’ve had a few clients contact me already in light of the coronavirus affecting the stock market, as they’re seeing falls in their investments and pensions. The common question is ‘should we remain invested or should we move to cash?’ We remind them of their financial goals and reasons for investing, investment time horizon, and the diversified nature of their investments with us.
What advice have you been giving clients, and are you going to change your approach?
We tell them that the coronavirus is a systemic risk that affects all markets, rather than an isolated incident so any portfolio changes we make will not specifically address this. Also for those with surplus funds, the lower stock market valuations represent good opportunities to “buy low” for long-term growth.
Have any events been canceled due to the virus?
No – I haven’t heard of any provider events being canceled, yet!
Zoe Dagless, financial planner at London-based Addidi Wealth
Are your clients concerned?
We are getting clients calling more because of the panic in the markets and wondering whether they should sell before it gets any lower.
What advice have you been giving clients, and are you going to change your approach?
The key is about education and telling them they will be selling on a loss and that all markets rise and fall. For us its just business as usual.
Have any events been canceled due to the virus?
We haven’t canceled any face-to-face meetings, nor have we had any requests to.
Petronella West, chief executive of London-based Investment Quorum
Are your clients concerned?
No, our clients are quite intellectual, so they aren’t swayed by the fear created by the press, so they are generally unconcerned about it and the effect on them.
What have they been asking? What advice have you given them?
They have largely been asking about investing more money, using the dips in the market to invest further, mainly in short bursts, because the market is going up and down.
Buying opportunities has been the biggest question from clients, and we have been telling them to stay calm. We used a Warren Buffet quote that ‘risk is not knowing what you’re doing’. So we think that we are well placed.
We are out of those sectors that have been affected by corona anyway, we take a ten-year view so we are making no changes.
Are you changing your strategy?
No. Fundamentally we invest in good businesses; we don’t buy into markets or noise, we buy companies, stick with the financial plan and try not to react.
