The last several months have seen international markets rocked following President Trump’s so-called “Liberation Day”, sparking significant anxiety among investors.
Looking into the impact of these events, research conducted by Praemium in conjunction with CoreData found that six in 10 advisers claimed the actions of President Trump had moderate to major impacts on portfolio construction.
As a result, 60 per cent of advisers reportedly made changes to their investment strategy in response to the subsequent market volatility that occurred.
Advisers also noted a rise in uncertainty that has seen 47 per cent reporting increased communication volumes as well as a “heightened need for reassurance”.
This need for greater support was particularly prevalent among high-net-worth advisers, a third (35 per cent) of which reportedly dedicated four or more hours per client over the last six months to strategy reviews.
Even so, around three-quarters of advisers (73 per cent) said they were still “cautiously optimistic” about risk and long-term investing.
However, a lack of flexibility and agility are proving to be hurdles in advisers’ ability to react quickly to rapidly changing market conditions.
Namely, the research revealed that navigating volatile markets was the top challenge (36 per cent) for advice businesses, followed by the burden of managing increased client communication (33 per cent).
With market fluctuations expected to continue, advisers said the ability to make rapid, informed decisions, speed in execution and trading and timely data were crucial to their ability to successfully respond to today’s markets.
Speaking on the findings, Praemium chief strategy officer Denis Orrock said current global market conditions are seeing advisers having to respond to rapid changes while also devolving time to support clients through these inevitable swings.
“In order to keep delivering this value for their clients, advisers have a growing need for platforms and tools that can support more frequent reviews, scenario modelling and timely reporting in volatile markets,” Orrock said.
In the wake of events on 2 April, a number of advisers told ifa that they had to react quickly to quell client concerns once it became evident the tariffs would have a notable impact.
Robert Rich, director and financial adviser at Unite Wealth, stated that as soon as there was a “shift in tone” across media reporting on the subject, his firm reached out to clients via email to confirm what was happening and what it could mean for them.
Northeast Wealth financial adviser James O’Reilly likewise said that his firm took pre-emptive measures ahead of 2 April by outlining the “different possibilities and the likely flow-on if the tariffs did materialise”.
“Following the announcement on April 2, we’ve sent out further updates to outline how things are unfolding and avail ourselves should anyone be feeling uncomfortable. I’ve made proactive calls to a few members since; it seems that most are feeling well-informed,” O’Reilly told ifa at the time.
Meanwhile, Stellar Wealth principal financial adviser Nicole Gardner pointedly said that “no one is happy about what is happening”, however, having the support of an adviser proved a comfort to her clients noting that none had told her they were “panicking and want to sell”.
“burden of managing increased client communication (33 per cent).” If you are getting that many calls, you have not done a good job in prior meetings about educating the clients about uncertainty, freq of downturns, the long-term view. I have had 0 contact from clients in a panic as every single meeting I constantly reinforce that the last 10 years has been above average, and to not expect them to continue, downturns can happen at any time, and why my portfolio inclusions mean they don’t need to worry. In the good times you set them up for the bad times.
“60 per cent of advisers reportedly made changes to their investment strategy in response to the subsequent market volatility that occurred.”
This is a concerning statistic. Surely professional advisers should be helping their clients block out noise, stick to their long term strategy, and NOT make kneejerk responses.