Investments  

Advisers play 'crucial role' in protecting client wellbeing

Advisers play 'crucial role' in protecting client wellbeing

Advisers encouraging clients to remain invested even during the predicted recession will be looking after their clients' long-term wellbeing and wealth, the head of Dynamic Planner has said. 

Ben Goss, chief executive of Dynamic Planner, said even with whole economies shut down, the role of the adviser in supporting investors in making the right decisions has never been more critical.

He said while clients are likely still focused on their physical health, advisers have been playing a "crucial role" in protecting not just their financial futures but also their overall mental health and wellbeing in the longer term.

The Bank of England last week presented an economic scenario in which house prices might fall 16 per cent and GDP might contract 14 per cent over the course of 2020. 

Mr Goss said: "When investment risk shows itself in a client’s portfolio, and with a backdrop of such negative news, it is understandable that for some it may be tempting to exit.

"This is where advisers really come into their own – and those conversations between adviser and client can be the critical difference between feeling anxious and acting.

"The support that advisers are giving clients today will help their prospects tomorrow, not just in terms of their financial wellness, but their overall wellbeing too.”

Dynamic Planner has created an investment uncertainty checklist, available on its recently launched content hub, which outlines four talking points to support concerned clients.

The points to use with clients are:

  • Be led by the science: Corrections, crashes and crises happen. While they happen for different reasons and are unsettling, the history and social scientific study of stock market cycles tells us to expect a recovery;
  • Remember the review planning process: the long-term return expectations used to build portfolios incorporate the potential for extreme events. Sticking with the plan means clients should be in the best position to achieve longer term objectives;
  • Focus on risk-based benchmarks, not high profile indices: diversification offers the best chance of mitigating the more extreme losses of individual markets and positioning portfolios in the right areas for the upswing when it comes. Risk-based benchmarks are the best comparisons.
  • Stay invested: history tells us that clients that stay invested for the duration, even through the turbulent times, do better than those who don’t. The most successful strategy is to stay invested, think ‘time invested’, not ‘timing of investment’.

Mr Goss added: "The social science of economics has studied the rise and falls of stock markets for hundreds of years. From Tulip Mania (1604), World Wars, the Spanish Flu (1918), The Great Depression, the 1970’s Oil Crisis, 1987’s Black Monday, the Dot Com Crash and the Great Financial Crisis (2008/9), while the cause of each were different, the recovery came and growth restarted."

Dynamic Planner's content hub aims to help advice firms bring the difficult conversations they will be having with clients to life, while enabling them to tackle key issues, set out options and reassure clients about their investments as the market turmoil continues.

simoney.kyriakou@ft.com