Fans of The Hitchhiker’s Guide to the Galaxy will recall its cover features a simple message for interstellar travellers to keep in mind at all times: “Don’t panic.”
While advisers and their clients rarely face the challenge of traversing the solar system, they would do well to reflect on the above phrases.
Investors’ resolve, after all, can be easily shaken.
By way of illustration, one survey found almost half of all respondents had made changes to their strategies or were planning to do so in anticipation of the outcome of the UK’s general election.
Well, polling day has been and gone, and the world is still turning.
Sure enough, there was not too much to panic about.
Over time, on balance, the result is likely to underline the guide’s wisdom by proving less than cataclysmic – at least on a galactic level.
Reflecting this reality, you have probably already read plenty of articles about how elections and other headline-grabbing events seldom have a lasting impact on markets.
Transparency, assurance and support
It is always worth preaching calm, but in the end it is also essential to understand and respect an individual’s wishes.
Advisers have to accept some clients will be determined to reassess their investments amid ongoing political and economic developments.
Many might be content just to tweak their allocations. Others may want to shift in or out of entire asset classes, sectors or regions. On the whole, most will be looking for some kind of 'reset'.
As with any phase of an investment journey, a key aim should be to facilitate decisions as painlessly and as efficiently as possible.
This is likely to happen only if changes can be made quickly, easily and with maximum transparency and assurance.
One recent headline said: “47 per cent of investors mulling over or have made changes to their investments, with one in 10 tweaking their pension strategy, new poll finds.”
In the platform sphere – the corner of the galaxy where I reside – user-friendly interfaces, consistent product-by-product analysis and clear reporting can go a long way towards ticking these boxes.
They can play a substantial role in helping investors make sensible, fully informed choices.
In my opinion, platforms that present clients and their advisers with the same information in the same format are especially useful.
Rather than promoting knee-jerk responses, they foster due consideration. They encourage clients and advisers to work together.
Contrast this with a non-professional investor executing multiple trades in a lonely frenzy of online wheeling and dealing.
I would expect panic and harm to be near inevitable corollaries of such an approach – when what is really needed is genuine collaboration and confidence.
Broadening the investment universe
Clients who feel compelled to exit some markets and enter others are also likely to benefit from access to multiple investments. This is an essential prerequisite if they are going to cast their nets in new and different directions.
