View more on these topics

Mark Dampier: Advice has never been more important than in 2018

As we head into 2018, we will be assailed with forecasts for funds, stockmarkets and economies. No doubt most will turn out to be wrong, simply because these things are generally impossible to predict.

However, we live in a world where most clients consider the role of an intermediary to be able to forecast market movements, and pinpoint the exact time to buy and sell an investment. I have always tried to tell them this is not a practical proposition. In fact, constant tinkering with a portfolio will usually make you poorer.

Riding out periods of volatility and investing for the long run is a more rewarding strategy, yet this is increasingly difficult for investors, with concerns growing each time a new stockmarket peak is reached.

It is also increasingly difficult to do any kind of asset allocation. The traditional model and balanced portfolio of 60 per cent equities and 40 per cent bonds has worked brilliantly over the last 30 years. But now the valuations of neither asset class sit at bargain basement levels and the so-called safety of bonds has surely got to make any investor nervous, given yields at rock-bottom levels.

In truth, the 2008 financial crisis is very much still with us. This crisis was nothing like any normal recession. It has also coincided with structural changes in the UK and, when combined with the changes in global demographics, the advent of some of the world’s most life-changing technology and huge piles of private debt, this has altered the normal business and economic cycles.

Structural issues will be with us for years to come. What worries me more is the fact more investors are going to have to rely on stockmarkets to provide for their retirement. This is not the time to debate drawdown and defined benefit transfers but my question is this: do investors really understand the risks if they invest almost fully in the stockmarket and do not have enough in reserve to weather the storms?

In truth, the 2008 financial crisis is very much still with us

In no way am I forecasting one such storm at present. In some respects, I am actually more optimistic, mainly because of the incredible levels of pessimism I see across markets, which normally turns out to be wrong. Our own stockmarket seems to have been completely written off by both domestic and overseas investors as a result of Brexit and the potential for a change of government.

Of course, these are huge issues everyone is going to have to face in the coming years. Yet, as we saw with our own EU referendum and the election of President Trump in the US, stockmarkets do not always react to these events in the way you expect.

One well-known journalist always says to me: bring me a problem, Mark, but bring me the solution too. Wise words, I always felt. At present, all I can see are lots of problems but in reality the solutions and various choices available are far easier for those who have large amounts of money. This provides greater opportunity to diversify. Advice and guidance has never been more crucial in my 35-year career than it is as we head into 2018.

Mark Dampier is head of research at Hargreaves Lansdown


John Lawson: 2017 vs 2018: Two contrasting years for pensions

Advisers should be prepared for a busy year ahead Anyone who works in pensions is likely to look back on 2017 as one of the quieter years for legislative and regulatory change. That is not to say we have all had a chance for a breather, of course. No matter what area of pensions you […]


Alan Lakey: Catch-22 on commercial decisions

I am a great fan of commercial judgement.  After all most readers would not still be in business if they or their employers hadn’t made sound commercial determinations at some point. Of course, not all commercial judgements are sensible or even well thought through and the end result can be detrimental to one or more parties.  […]


All mortgage transactions on hold as BoE hit by technical problems

UK borrowers cannot access a mortgage right now as the Bank of England confirmed a key payments system has been hit by technical problems. The Bank says it identified a technical issue this morning related to some routine maintenance of the real time gross settlement system payment system and has paused settlement while it resolves […]


Nick Bamford: Contingent charging scares off clients

I received a new enquiry by email this morning. It contained a statement from the sender as follows: “I have spoken to a number of advisers but I feel they are trying to sell me products rather than give me impartial advice. What I want is some proper advice for which I can pay a fee […]


Attitudes toward income protection

Ross Jackson – Senior Protection Marketing Manager, Royal London  Royal London commissioned Opinium to run our State of the Protection Nation research to find out how people felt about their own protection needs and the industry as a whole. We surveyed people who had already taken out some kind of protection insurance and those who didn’t […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment