At the beginning of the month I attended an investment presentation run by Beaufort Investment Management. It was a well-organised event with a positive review of 2014 and some encouraging comments on the investment market for 2015. I was, however, a little surprised by the lack of concern about the forthcoming UK elections and wider global events.
Maybe professional investment managers have the right outlook, but I feel terrible unease about the election. While a hung parliament seems the likeliest outcome, what shades of the rainbow will it actually be? Currently, most political commentators are expecting the Lib Dems to be annihilated, with the Conservatives sweeping Ukip to one side. But is this really likely? The electorate can be very fickle and surprising in what they are willing to accept. You only have to look at the Scottish referendum to see this. The independence lobby largely ‘sold’ their story on the back of emotion with a monetary underpin secured by a strong oil-based economy. The economic argument for independence depended on oil trading at $130 a barrel, even though at the time of the election it was actually trading at less than $100. Today oil is trading well below $50 a barrel, but would this make any difference to the vast majority of the ‘Yes’ voters if a further independence referendum were held today?
Equally, will Ukip be so easily sidelined, and even if it is, the Conservatives are committed to an “in/out”referendum on EU membership, which is likely to shake overseas investors far more than the Scottish Independence debate.
Now, to be fair, I should also mention the other parties. Clearly, there are uncertainties facing Labour – especially if they lose. At the very least this will see a change of party leadership and a corresponding policy shift. And what about the Greens who have been categorised as a minority party even though they have a national presence? The list could go on, but the point is that whether or not professional investment managers are disturbed by elections, many of our clients will be, and they will need a safe pair of hands to help them navigate through the political, and, potentially, economic turmoil that may follow in the next few years.
Perhaps voters will be swayed by the apparent strength of the UK economy or perhaps it will be the NHS that dominates their thinking. Certainly, my mind is focusing on the NHS. While I have private medical insurance I am about to go into hospital for surgery under the NHS. It was a ‘no brainer’ for me as my operation requires two large teams to operate simultaneously, and only the NHS can cope. In any event, my operation is allegedly covered by the armed forces covenant, although neither of my consultants appeared to have heard of it.
Because of the pressures facing the NHS, it is likely that we will see an increase in private medical insurance. This will be good news for underwriters of these schemes as in recent years there has been a reduction in the numbers covered privately.
So, what does this mean for financial advisers? Clearly our clients need our help and support – maybe to calm their nerves if election results are unwelcome, to help them get the prompt medical attention they want, or to guide them through the investment rollercoaster that could follow the increasing concerns over terrorism.
Having said all that, perhaps the greatest need will be for guidance on the numerous retirement options clients now face. At the lower end of the advice spectrum, the basic government-backed guidance from The Pensions Advisory Service and Citizen’s Advice Bureaux may be sufficient. I hope so as millions of individuals will depend on it. But in many instances individuals will need regulated advice. This may lead some banks to re-enter the market with an automated ‘simplified’ advice approach, but for me the biggest winner must surely be providers of full regulated advice.
As a director of an IFA business I am therefore looking forward to a positive 2015 and beyond. This is a message I delivered to one fledgling financial planner at the Beaufort Investment seminar. He has only just joined the profession after completing an English degree and is now embarking on his examinations. I outlined the desirability of going on to Chartered Financial Planner status and explained why he should be proud of the profession he was joining. We do a great job and we have a bright future.
Dr Peter Williams is an independent business consultant and chartered financial planner
