Investment advisers are advising their customers to adopt a more cautious investment
strategy, by recommending more defensive stocks because of Brexit.
According to a poll of 277 advisers by Canada Life, around one in three advisers, or 30 per cent, are more likely to invest in defensive stocks as a result of the referendum, up substantially from one in 10 a year ago.
The research also showed 19 per cent of advisers are looking at opportunities to invest
overseas, up by more than 10 per cent last year.
Only 3 per cent of advisers aren't investing in an European Union jurisdiction because of Brexit.
The results reveal the difficult choices faced by advisers when it comes to recommending a
financial strategy.
Richard Priestley, executive director at Canada Life, said advisers continue to plan client portfolios that address the known and unknown alike.
He said: "Invest too much outside the UK and you could miss out on a roaring economy. Stay in, and potentially watch the value of your clients' investments fall. With Brexit looming nearer, our research suggests more advisers are likely to take a cautious approach until the impacts are better understood."
While caution is increasingly the watchword, that isn't translating into a fear of international
investments.
Among advisers, 19 per cent are looking more at opportunities to invest overseas, up by more than 10 per cent from a year ago—from 7 per cent to 19 per cent.
Mr Priestley said: "While the exact consequences of Brexit continue to remain unclear, it is
likely that in the event of a hard Brexit we would see some devaluation in sterling.
"That would benefit those businesses with overseas revenues, something advisers may need to keep in mind in terms of their clients' financial strategies.
"It is not surprising that international markets are looking increasingly attractive, as advisers
fear an adverse impact primarily focused on the UK."
Adrian Kidd, lifestyle financial planner at Radcliffe & Newlands, said working with
unknown factors is nothing new.
He said: "When I construct an investment portfolio, I have to consider a wide range of future scenarios and the possible impacts of each one. So the same approach can be applied to one's general finances.
"Without knowing what Brexit will actually look like, we can plan contingencies that will help shield in the event that things get really bad."
Mr Kidd is also concerned about economic growth, which could translate into more cuts from the government as it would be necessary to balance the books.
He said: "That said, the fundamental principles remain the same. If you have sound financial foundations and you get the basics right, then you can worry a little less about specific events, be it Brexit or a banking crisis, and stick to your longer-term plans."
