I was interested to read a recent article on FTAdviser.com (Brexit sees surge in insistent clients demanding cash) that said financial advisers had been feeling the pressure from clients demanding their capital was turned into cash in the lead-up to the European referendum.
It also reported FE research which showed popular funds had been ditched in favour of cash funds.
As none of us have a crystal ball, it’s not surprising there’s recently been an outbreak of the jitters when it comes to investments but, as advisers will know, knee jerk reactions to world events rarely pay off for the long-term investor and history shows it’s time in the market, not timing the market, that is the sensible approach.
Obviously everyone has different levels of comfort when it comes to choosing to move investments and it’s a brave adviser who ignores calls from clients to seek what they perceive to be a safer haven for their life savings.
The boffins at PortfolioMetrix recognised this issue when they set up the firm and they created a tool that is designed to mitigate the risk of a client insisting the agreed investment strategy is consigned to the bin at the first sniff of trouble.
The Financial Personality Assessment, which is part of the PortfolioMetrix Wealth Explorer tools, uses behavioural finance that reveals how a client is likely to behave during times of volatility. Often what it shows comes as a revelation to the clients themselves.
This awareness of likely behaviour gives advisers the opportunity to discuss with clients in advance the dangers involved in deviating from agreed investment strategies and provides a framework for coaching clients to help them understand how costly an investment panic attack can prove over the life of the investment.
With uncertainty around the future of the UK unlikely to be resolved for some time, the jitters are set to continue but on this rollercoaster ride I know I’d rather be strapped into a purpose built car than put my trust in a mattress stuffed with cash.
