“May you live in interesting times” is widely known as a Chinese curse. Supposedly, by wishing your enemies to war – the interesting times – you were wishing them ill. In fact, the curse is a myth. There is no equivalent Chinese saying and the “interesting times” phrase can probably be traced back to the 19th century politician Joseph Chamberlain. Regardless of its origins, though, the saying definitely sums up the last few weeks.
In the past couple of weeks alone we have seen a new Prime Minister appointed with 48 hours’ notice and a subsequent clear-out of the Government, giving us a new Chancellor, new Department for Work and Pensions secretary and a new pensions minister. They face a Labour party that appears more dysfunctional by the day.
Meanwhile, we have had a horrendous act of terror in Nice and a failed coup in Turkey, adding a fresh dose of volatility into an already unstable region.
And the reverberations of the Brexit referendum still echo. There is not yet any real sense of how or when the UK might leave Europe (or indeed what “out” looks like) and we face the very real prospect of another vote on Scottish independence.
Yet looking back, the past couple of weeks have been some of the most satisfying since I started working as an IFA. This is because it is at times of uncertainly and market volatility that the value of sound financial advice comes to the fore.
Like many IFAs around the country, I have been working the phone hard and talking with clients. We are helping them understand the potential implications of recent events and providing a take on how their personal finances might evolve.
In some cases, we have been adjusting income flows or taking profits. As a business, we have been strong supporters of international over UK equity funds over the past couple of years.
The “sterling windfall” caused by the fall in the pound left some of these positions up by more than 10 per cent overnight and provided a good opportunity to top up the income reserves for clients in drawdown.
For our more adventurous clients there have been some tactical buying opportunities as we look to allocate money to areas where markets may well have oversold. We have also facilitated a degree of share trading for those clients who like to add their own ideas into the mix.
In many cases, though, there has been very little to do with a client’s portfolio. Our diverse portfolios are doing what they should. Here, the conversation has been much more about providing reassurance in the face of overly pessimistic headlines and reminding clients about the longer-term strategies we have been working to.
We have been emphasising the areas of liquidity in the portfolio, and highlighting where income is being generated. But I am also being very clear about what we know and what we do not know; there is no point pretending you have some magic crystal ball.
Judging from the feedback from these conversations, injecting a measure of calm and perspective into the heat and noise generated by these “interesting times” is often what a client values the most.
Stephen Womack is a chartered financial planner and director of David Williams IFA