On 13 June, the world was rocked when Israel launched missiles at Iran, dominating the global stage due to the highly publicised play-by-play coverage across mainstream media and social media platforms.
Though the war has cooled somewhat in the last couple of days, the simmering tension has it at the forefront of many people’s minds, and investors are now faced with considering whether their investment choices will result in them indirectly profiting from war and whether they are comfortable continuing down that path.
However, appearing on The ifa Show, Stellar Wealth founder and financial adviser Nicole Gardner explained that clients tend to feel an overall sense of separation between their investments and the conflict, with some seeing situations like this as an opportunity to further bolster their returns.
“A few months ago, I did have a number of clients come to me and say, ‘Look, we want to invest more in defence because we think, you know, we’re not done yet. We think things might happen now that Trump is in power’. People have the choice to do that,” Gardner said.
“I always have these ethical conversations with clients when we’re putting together their portfolio, and I ask them what’s important to them, and to be honest with you, the majority of my clients say, ‘Nicole, we don’t really care. We just want to make as much money as we can.’”
“And a lot of them feel that they’re ticking their ethical box by recycling, contributing to charities, you know, helping in their local community, they’re giving back in that way. I think a lot of them feel potentially like that doesn’t really relate to them.”
In a world where many have become somewhat desensitised to global conflicts, some clients say they feel guilty benefiting off the back of wars while also accepting this is simply the reality of being an investor.
“But, what I will say, I did have a review meeting with a client yesterday and we were talking about what’s happening in the Middle East, and we were talking about, you know, will the market go down? Will it go up?” Gardner said.
“We came to the conclusion that, when we look historically at what happens post-war, quite often there is a bit of a boom, and my client expressed that she did feel a bit bad about that, knowing that potentially there will be some upside following all of this.
“But, look, that’s just how the world works. We just roll with it. We stick to our plan. We’re not changing the strategy because of this at all.”
On top of this, Gardner suggested that because of how investing generally works, where advisers are building diversified portfolios rather than just hand-picking individual stocks, clients end up investing in “essentially everything”, making it difficult to avoid stocks that might benefit under conflict.
“It’s not about having an intent of necessarily choosing a particular stock to profit off war or not. We are diversified. We’re investing across markets globally and whatever happens, happens,” she said.
When it comes to ethics, Gardner explained that “everyone is different, everyone has different views, different political alignments”, and as such each client will need to navigate the ethical traps in this space as individuals and decide whether or not they want to make changes now that the reality of war is centre stage.
To hear more from Nicole Gardner, tune in here.
“ticking their ethical box”
(but, away from the optics, advisers will be unmercifully punished by the client if the returns are meagre)