As part of today’s Friday Focus, looking at what advisers need to be doing ahead of the Chancellor’s budget on 26th November, Steph Willcox, Head Actuary, Dynamic Planner, has some excellent tips to make sure that your clients don’t succumb to panic. After all, and as advisers will know only too well, by keeping a level head (not always easy!) and focusing on the long term is where the real magic lies in the financial planning process.
Steph says: “As the November Budget gets closer, media speculation is starting to ramp up too. When headlines shout about sweeping changes that affect everyone, it’s natural for investors and advisers’ clients to feel anxious. But history shows us that reacting emotionally to media headlines and market noise can be costly.
“We only have to look back to the COVID-19 market crash, where the FCA’s Financial Lives Survey showed us that between February and October 2020, 10% of people surveyed withdrew invested money and held it as cash due to concerns about market volatility, therefore crystallising huge losses at the worst possible time.
“These decisions weren’t driven by strategy, but by fear, and it’s up to financial advisers to support and ensure their clients don’t repeat these mistakes.
“So, what actions should advisers take when working with their clients ahead of the big day?
- Reaffirm the long-term plan: Remind clients of the goals they’re working towards and how their portfolio is designed to weather short-term volatility, not just in the markets but also in Government policy.
- Communicate proactively: Don’t wait for clients to call in a panic. A well-timed communication or call can reassure them that you’re watching developments closely. This will be particularly important for vulnerable clients, or any client you are aware of that has made hasty financial decisions in the past.
- Educate: Help clients understand that budgets often sound more dramatic in the media than they are in practice, and that together you can make sound financial decisions regardless of the outcome of the budget. For clients who are not imminently approaching retirement, there’s probably a lot more Budget and Government changes to live through before feeling these effects.
- Use behavioural insights: Highlight past examples (like the 2020 crash, or the Truss mini-budget) to show how staying invested can often leads to better outcomes.
“Ultimately, financial advisers are there to guide clients through uncertainty. By staying calm, informed, and connected, you can help ensure your clients aren’t the ones making knee-jerk decisions they’ll regret.”
