Brexit 

Brexit pushes clients to de-risk

Brexit pushes clients to de-risk

An increasing number of clients are looking to de-risk their investment portfolios amid uncertainty surrounding the outcome of Brexit, according to advisers.

Research published today (April 1) by Time Investments showed clients are increasingly looking to move away from riskier investments with the majority of advisers recommending cash to those looking to de-risk their portfolios.

More than half of the advisers surveyed, 53 per cent, said the number of investment clients looking to de-risk is now greater than at the same time last year, with 75 per cent citing concerns over Brexit as the main driver.  

Stock market volatility was ranked as the second biggest factor at 48 per cent, the global economic outlook at 35 per cent, concerns over the geopolitical outlook at 26 per cent and a "real" fear of financial loss at 26 per cent.

The research showed 42 per cent of advisers recommended cash to clients looking to de-risk their portfolios, followed by long income property at 26 per cent, alternative investments and bonds both at 25 per cent respectively, and real assets at 23 per cent.

Henny Dovland, business development manager at Time Investments, said the research highlighted how the combination of economic and political uncertainty was having a "profound" effect on investors’ attitudes to risk. 

She said: "They are moving to investments which have low correlation and provide a greater level of certainty in terms of delivering secure income streams."

The research by Time Investment was based on 65 UK-based financial advisers and carried out in February. 

Thomas Watts, investment analyst at Cumberland Place, said: "With the current economic climate being what it is, it is important we make assurances that our clients' investments are mitigated against unnecessary risk.

"As such, we are increasingly recommending defensive investments to form a core part of our clients' portfolios."

But Ivor Harper, owner at Park Financial, said his message to clients would be, since they are investing for the long-term, they should not "fret" about the impact of Brexit on their funds.

He said he recalls many advisers suggesting de-risking in 2016, prior to the Brexit referendum itself, in case the UK voted to leave. 

He said: "Well, that decision would have turned out well because, if you did switch into cash at the beginning of June 2016, you had much cause to rue that decision as the FTSE soared.

"The bottom line on this is that, once again, it's just people pretending to know something about the future which, to be perfectly blunt, they don't.

"No one even knows for sure when, or even if, we will have Brexit - let alone the impact on investments." 

He added: "We are not going to make decisions on short-term plays and start jerking client's money about here and there because we think we can call the market - because we can't. And anyone who says they can, is a liar or a fool."

rachel.addison@ft.com