In a volatile world, advice matters more than ever

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Oct 31, 2019

Volatility abounds. I love having the opportunity to share my views via Money Marketing but, if I’m honest, it can be increasingly tricky to pen comment without it being out of date before the ink has dried. Today, one day’s certainty quickly becomes the next day’s history.

For a commentator, this may be a mild inconvenience. For an adviser and their clients, I have no doubt this raises more significant challenges and concerns. But it is through these times of change that the advice community can, and routinely will, demonstrate its value.

Given today’s volatility, I will preface all my following case studies with the caveat ‘at the time of writing’. So, at the time of writing, Brexit’s future looks no more certain than it ever has.

At the time of writing, trading relationships between the global Goliaths of the US and China continue to strain, while US president Donald Trump is threatened with impeachment at home and Chinese president Xi Jinping is threatened with rebellion on the streets of Hong Kong.

At the time of writing, missiles are exploding in the oilfields of Saudi Arabia. At the time of writing, the FTSE is experiencing its biggest one-day falls in years. At the time of writing, the words ‘global recession’ are being voiced with increasing frequency and alarm. And, at the time of writing, a 16-year-old Swedish girl is warning the United Nations that “entire ecosystems are collapsing”.

By nature I am an optimist. I share the views of former US president Barack Obama that “now is the greatest time to be alive”. But even I can understand the temptation to sink under the duvet and wait for the storm to pass.

Aviva’s own customer insight highlights this time of angst. According to our research, those who think the UK economy is set to ‘get worse’ outnumber those who think it will ‘get better’ by more than three to one.

Those who trust the UK institutions of the government, the media and business number fewer than one in five. And those who think life in the UK is riskier than it used to be amount to more than half (56 per cent), compared to just 12 per cent who disagree. In this final insight, the middle 30 per cent are maybe too risk-averse to cast a vote.

My role is not to tell advisers how to do their job, but I can remind them of the value they can bring.

As a little anecdote, a colleague of mine recently experienced her first taste of financial advice. She praised the skill and knowledge of her adviser. She was impressed by their ability to translate the technical into the tangible. But beyond these hard skills it was her adviser’s ability to reassure that she valued the most. As with a medical doctor, a financial doctor can make a huge difference by caring as well as curing.

Few are predicting an end to volatility any time soon. And this volatility comes at a time when an adviser’s ability to cure and care is needed more than ever.

Personal responsibility

Personal responsibility for financial wellbeing is sitting more heavily on the shoulders of the individual; our pension freedoms have brought with them greater pension responsibilities; and the maturing of our baby-boomer generation suggests that more may be set to reach retirement in the coming decade than in any that have gone before, and maybe more than in any that will come again.

Volatility can’t be avoided, but panic can.

We have tools at our disposal, such as: today’s diversity of fund options; innovative investment vehicles to help smooth returns; and online resources that enable us to monitor and manage for the long term.

Fortunately, deploying these tools is a well-qualified army of advisers. This final reassurance helps me keep my head while many around me appear to be losing theirs.

Alistair McQueen is head of savings and retirement at Aviva

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