Investors may start voting with their wallets if gloom continues to inhibit household consumption and investment, Alastair Winter has warned.
The chief economist for broker Daniel Stewart warned that various political and economic fundamentals were “catching up” on financial markets.
He said: “The G20 finance ministers are right to see gloom as inhibiting household consumption, business investment and risk-taking, but the markets are also surely right to feel that things are not going well and, certainly, not to plan. Nor is it easy to see how it will get much better soon.
“Accordingly, investors cannot be blamed for looking at the mounting – and converging – problems, and voting with their wallets”.
While advisers could control risk to a fair degree, they could only influence return, Mr Winter said. He added that having a focus purely on return was “always wrong, whatever the scenario”.
Jason Butler, a planner at London-based Bloomsbury Wealth, said his clients had not been getting in touch about the current market volatility. He said: “This is just a normal rebalancing. If you are a net accumulator it is a great time to invest, and if you are a decumulator this demonstrates why it is important to have an adequate cash reserve.”