The continued risk of the UK leaving the European Union without a deal would be a "worst-case scenario" for the advice market, Schroders Personal Wealth has warned.
Brexit has returned to the forefront of British politics in the aftermath of the Conservative party's election victory and with it the possibility of a no-deal scenario as prime minister Boris Johnson has vowed to set a strict timeline for trade deal talks.
In the aftermath of last month's general election, Mr Johnson moved to outlaw extending the UK's membership of the EU beyond the end of December - meaning a no-deal exit if a trade agreement is not reached by that time.
But Marcus Brookes, chief investment officer at Schroders Personal Wealth, warned leaving the EU without a deal would be one of the worst possible outcomes.
Mr Brookes said the shock to trade relationships, legislative frameworks and logistical chains could have "painful short-term ramifications".
He said: "The spectre of a no-deal scenario returned quickly following Mr Johnson’s election victory.
"The prime minister wants to enshrine in law the UK’s departure from the EU no later than December 2020. That’s 11 months for a process that, according to a 2016 study by the World Economic Forum, takes at least four years.
"A potential consequence for financial advisers is that they may have to spend more time ensuring that clients aren’t distracted by short-term market noise such as fluctuations in the value of the pound, and see-sawing of stocks and bond prices."
Meanwhile consultancy Bovill predicted greater scope for regulatory consultation than previously seen when the UK finally leaves the EU, under a regime where rules have been largely made in Europe.
This would potentially give market participants a greater say in the regulatory direction of travel, Bovill said.
Ben Blackett-Ord, chief executive at Bovill, said: "The UK’s exit from the EU will cast the FCA as much more of a ‘rule maker’ than a ‘rule taker’, a position it has largely adopted in the recent past.
"This will likely bring much greater collaboration between the regulator and firms when it comes to drafting and testing new rules."
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