Property funds and currency-related investments tanked in the weeks after the vote to leave the European Union but one financial adviser managed to move his clients’ holdings in advance.
Colin Parkin, managing director of Ample Financial Services and member of the Million Dollar Round Table, said before the vote to leave the European Union in June this year, he met with fund managers to ask them what would happen to their funds in certain scenarios.
“They asked us why we wanted this research, and we said we wanted to know what might happen to our clients’ investments if there were a Brexit, or if the UK remained in the European Union.
“As it happened, most of our clients were intending to vote for a Brexit and many people around us in Lincolnshire were also leaning towards a Brexit.
“So we informed all our clients we thought the likely scenario would be ‘Leave’ and as a result, warned that property funds and currency holdings would take the hardest hit.”
He said after the warning, most clients agreed to sell out of their property funds and currency holdings, apart from a few clients whose portfolios suited long-term investments in these asset classes.
Mr Parkin added: “Clients were ringing us the day after the result was announced and asking us what this meant for their investments - and we could say ‘nothing’, as we’d taken them out of daily dealing property funds and currency holdings.
“This proved to be the best move. We put them into default funds, such as Standard Life’s MyFolio range.
“Part of being an adviser is having the foresight to analyse what might happen in various scenarios and to make informed decisions to protect our clients’ wealth.”
According to Mr Parkin, the average portfolio size of his client base is £600,000 to £700,000, and the bulk of his clients are in their 60s, so wealth preservation is “vital”.
He has now warned the US election might also have an effect on the UK market - “we tend to do well when there’s a Democrat in the White House and badly when there’s a Republican”, he commented.
However, he has not moved any clients out of US funds yet. “We are not close enough to it to know how to position portfolios, but we will start to look toward the early part of October as to where to position clients based on expectations.”
His comments came as investor data from the Fathom Consultancy showed consumer confidence for the UK has rebounded from its largest fall in over 25 years to the still weak (but more moderate) level of confidence seen at the start of 2014.