Property wobbles caught some by surprise

Kevin O’Donnell

Kevin O’Donnell

The suspension of several property funds recently is one of the most striking material events to have hit the financial services sector following the Brexit vote.

It caught a number of investors by surprise and no doubt some advisers. It will probably not be the last panicky action by financial providers, but I suspect most of the suspensions of funds will be lifted in the near future.

The suspensions have, however, highlighted how key property, both commercial and residential, is to national well being and investor confidence.

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There are already signs of a slowdown in the residential property market and predictions of more challenging times ahead for commercial property.

Many readers will say, well there were a lot more effects of Brexit and indeed there were and we probably have not seen the last, but the stock markets have rallied and the pound has steadied. As far as I know, trading was not suspended in equities or the pound. For most investors the wobbles, at least for the time being, are over.

Given the dramatic suspension of some property funds (and I will deal with issues around open-ended funds later), it might be expected that financial advisers will have been inundated with anxious clients calling them, fearing financial catastrophe.

I know many have received a few calls, but the expected flood did not materialise. This may well have been down to markets steadying quicker than expected, but it may also be due to other factors too.

Some recent research I saw asked advisers why they thought clients had not inundated them with calls and the answer, in most cases, seems to have been that advisers got in first with the bad news, actively messaging clients with communications.

These provided both reassurance to clients, underlining the fact that they were on the case. These communications also answered most clients’ questions.

For this we have to thank modern communication such as email, texting and social media. All pretty much instant these days and now integral tools for most advisers.

We also have to thank the change in the nature of advisers brought about by regulatory momentum. Back in the bad old days of commission-driven sales, clients were seen as sales targets, to be ‘flogged to’ once and then forgotten.

I remember many IFAs in those times telling me they had 2,000 or more clients. In reality they were just buyers of a policy or investment plan and to be called ‘clients’ was stretching the meaning of the word.

Today, clients are seen as customers to be cherished and, vitally, kept informed. No client likes to be kept in the dark and to those advisers who went to great lengths to keep their clients up to speed with the momentous changes we witnessed, I offer you a pat on the back. For those who did not, perhaps your communication process might need some updating.