In spite of the lovely warm, sunny weather, the political and economic storm clouds are definitely threatening, particularly around the question of Brexit.
Although it may seem almost impossible to prepare for what is unknown territory in terms of outcome, there is real merit in financial advisers using the traditionally quieter summer period to get their ducks lined up in terms of worst case scenarios. In the spirit of being helpful, I’ve put together my own quick checklist that advisers may find useful.
1.The three Ds: diversification, diversification, diversification
As no-one really knows what will happen to financial markets once we get nearer to having (or not having) a Brexit agreement, it makes sense to check that clients’ portfolios are well diversified. It’s the mantra for our own investment team so it’s worth checking with investment providers to make sure no-one is caught napping.
2.MiFID II and the 10% rule
Now is a good time for advisers to review the MiFID II 10% drop rule and check they have robust processes in place. A free-to-download paper we produced earlier this year may help. Reviewing the rules is particularly important for advisers working independently because they are in the front line of managing this process themselves. It’s easy to assume that either the platforms or the discretionary investment providers will contact clients in the event of market drops but our in-house research shows that there is a high level of inconsistency around who is doing what so it’s essential to check.
3.Hope for the best but plan for the worst
Developing a plan that can be quickly and easily activated (even if you’re on a beach in Marbella) will not only provide peace of mind, it will help mitigate falling foul of the regulator. It will also demonstrate to clients that you are ‘on it’ and they can rest assured you are managing their best interests at all times.
You never know, perhaps things will work out to be as fine as this fantastic summer we’re enjoying in the UK. Let’s hope so.