Market volatility is expected to increase in 2026, with advisers anticipating client concern on its impact to be a bigger issue as Government efforts to boost retail investment gather pace, according to new research from Wesleyan.
The vast majority (92%) of advisers believe investment markets will be more volatile in 2026. They expect uncertainty over the global economy (68%), the rate of UK inflation (61%) and Bank of England interest rate decisions (50%) to be the most significant contributors to market volatility, along with new, intensified or enduring global conflicts (42%) and a fall in global technology equities, including AI companies (39%).
More than four in five (82%) advisers believe the Government’s push to build a stronger culture of retail investing in the UK will make client concerns around market volatility a bigger issue.
Almost the same proportion (84%) believe the performance of their clients’ investments is under threat due to market volatility next year. Meanwhile, more than two fifths (45%) expect between 20% and 40% of their clients to be put off from investing in growth assets such as equities, bonds or property.
The threat is also affecting retirement plans, with more than two fifths (45%) of advisers expecting most of their clients at or near retirement to postpone or change their retirement plans as a result.
James Tothill, Investment Specialist at Wesleyan Financial Services, said: “Market volatility is set to be a defining concern for clients in 2026, and with the Government encouraging more people to invest, advisers will potentially need to help a broader base of people to understand and navigate these conditions
“Beyond portfolio management, the key will be to help clients maintain their investment discipline and recognise that volatility comes with investing in growth assets.”
Wesleyan’s research also reveals that advisers are deploying a range of strategies to help their clients manage market volatility in 2026. The most common approach is client communication, with six in ten (60%) advisers planning to discuss what’s driving volatility, what the future outlook could be and what it means for their clients’ money and goals.
Nearly half (48%) will seek further diversification opportunities, such as commodities or private equity. The same proportion (48%) said they will start or increase investments in a ‘smoothed’ fund, which actuarially adjusts for market volatility to smooth investment returns. A further 41% will advise clients to de-invest from certain sectors or markets.
James Tothill added: “We’re seeing growing adviser interest in smoothed funds as a way to help specific client segments manage volatility without sacrificing long-term growth potential.
“Smoothing offers a way to stay invested in growth assets while avoiding the emotional and financial impact of short-term market swings, whether that’s helping clients maintain discipline during uncertain periods or protecting those who simply can’t afford to see significant portfolio fluctuations at critical points in their financial journey.”
