What advisers can do to reassure concerned clients

This article is part of
Guide to the UK market post-Brexit

Does it matter?

David Baker, chief investment officer at Mazars, notes the first question advisers must assess with their clients is whether the UK’s exit from the European Union matters to individual client portfolios.

He points out the correlation between the performance of the FTSE 100 and movements in the value of sterling mean there is a measure of predictability, and the key is to ensure clients are diversified enough that they are not left over exposed to the movements of the currency, in either direction.

"Over the long run, we consider that there is little to worry about. In our opinion, the UK is still likely to remain a major global economy and London a major financial centre, even in a world of low growth," he acknowledges.

"For those still concerned, we consider the best policy is to diversify as much as possible across regions and asset classes, dependent on individual client requirements, seeking as diverse sources of return as possible."

He adds that neither he, nor most other people, “have the slightest clue” as to what the final outcome of the Brexit negotiations will be, but says the key is for advisers and clients to maintain a flexible approach.

Alastair Mundy, manager of the £873m Investec UK Special Situations fund, explains: "Investors should view the possible consequences of Brexit in the same way they view any other possibility of recession, because ultimately, when advisers or their clients talk about Brexit, what they are afraid of is recession.”

He adds many UK equities are already priced as if a recession will happen, meaning clients' risk to the downside of Brexit is already muted.