A recent survey conducted by Wesleyan has revealed concern amongst financial advisers regarding the potential impact of market volatility on their clients’ investments and retirement plans over the rest of the year.
According to Wesleyan’s research, a significant majority of financial advisers, comprising two-thirds (63%), anticipate that market volatility will pose a threat to the performance of their clients’ investments over the next 12 months. Additionally, more than half (51%) of advisers foresee the likelihood of their clients at or near retirement postponing or altering their retirement plans due to market volatility.
Advisers identified various factors expected to contribute significantly to market volatility in the coming year. Uncertainty surrounding the Bank of England’s interest rate decisions emerged as the top concern, cited by over a third (36%) of respondents. Other notable factors include uncertainty over inflation rates (27%), the possibility of a UK general election (24%), and a new presidential election in the USA (24%).
In response to the perceived threat of market volatility, advisers are actively implementing strategies to mitigate risks for their clients. Popular approaches include increasing investments in ‘smoothed’ funds (22%) and reducing exposure to equities (20%).
Nick Henshaw, head of Intermediary Distribution at Wesleyan, expressed concern over the persisting market volatility and its potential implications for clients. He emphasised the importance of advisers carefully assessing clients’ risk appetites and capacities for loss, to develop effective strategies that mitigate volatility while supporting long-term financial goals.
Henshaw highlighted the strategies advisers are employing to address market volatility, including increasing investments in ‘smoothed’ funds designed to adjust for market fluctuations. He emphasised the role of specialist funds, such as Wesleyan’s on-platform With Profits fund, in creating balanced portfolios that offer exposure to the market while ensuring a smoother investing journey for clients.
As market volatility continues to present challenges for investors, Wesleyan’s survey underscores the proactive approach taken by advisers to safeguard their clients’ investments and navigate uncertain economic and political landscapes.
