Advisers have stressed the need to reach out to their clients in a period of what could be a prolonged uncertainty following Britain’s vote to leave the EU.
The referendum result prompted the pound to fall 7 per cent against the dollar, and the FTSE 100 has fallen by more than 4 per cent this morning.
The UK’s decision to ditch the EU also resulted in the resignation of Prime Minister David Cameron.
But advisers have stressed the need to keep calm.
Stephen Womack, director at Northamptonshire-based David Williams IFA Chartered Financial Planners, said: “We’re facing a period of profound change. As advisers, we need to be putting our arms around clients, especially those in income drawdown, and reminding them that we have seen difficult days before.
We need to be putting our arms around clients, especially those in income drawdown, and reminding them that we have seen difficult days before. Stephen Womack“They need to understand that the true impact of this vote won’t be measured in five days or five weeks, but in five years and even five decades.”
He added that clients with high cash positions could find long-term buying opportunities, but he would be very circumspect about rushing in too quickly.
Patrick Connolly, a chartered financial planner with Chase de Vere, agreed, saying: “Markets hate uncertainty, and so the result of the referendum has unsurprisingly caused a great deal of volatility.
“When stock markets have already fallen and many people are worried, it is usually a better time to be buying rather than selling. Think back to the financial crisis of 2008. One year on from hitting its lowest point, the FTSE 100 had pulled back by more than 60 per cent.”
Colin Low, managing director of Suffolk-based Kingsfleet Wealth, said he had told clients that their investments were structured strategically, not tactically.
He added: “There will be downs as well as ups, irrespective of political decisions.
“The market doesn’t like what could happen when it doesn’t know what will happen, but underneath all of this we are investing in businesses not in countries.
“We prefer active, and passive is going to have a tough time following the markets up and down. There will be opportunities and companies that outperform others, and you want someone who can find them.”
Richard Ross, director of Norfolk-based Chadwicks, said he preferred passives, but earlier this year he introduced some active funds to protect against global volatility.
He said: “Although predominately passive, we have introduced some specific actively managed funds where they can provide exposure to non-correlating assets. We have a higher than usual exposure to overseas markets where the fall in the value of the pound should compensate for some of the market volatility.
“It is going to be a very difficult time ahead.”
