Communication is the key

It has certainly been an eventful start to the year from a financial perspective – it’s never dull for long, that’s for sure, in economics and in financial planning. It’s impossible to ignore what’s been going on in the world, more so when it starts impacting our day-to-day lives, such as with rising oil prices when we fill up our vehicles.

Since I last wrote an article, the world is in a very different place due to the situation in Iran. As I have always said when people ask me about what I think will happen to their investments in the days, weeks or months ahead, my answer is always I simply don’t know, as what is going to happen next on the global stage is not anything that can be predicted.

The one thing I do know however, is that rather than trying to predict, it is best to simply be prepared and fully understand what you are invested in and why. Anyone with a well-structured portfolio should be aware of the risks involved, which is an important part of what I do. In simple terms, I like to use the eggs in a basket analogy, as when things like the Iran situation pop up, there tend to be winners and losers. The price of oil and gas may have risen, creating issues with prices in the stock market, but if you hold shares in oil and gas companies, these may well have increased.

Conversely there is now upward pressure on inflation, which may well mean interest rates no longer continue to fall, with the possibility of rises again in the future. This is good news though if you have money on deposit, as your savings interest is less likely to decrease, and will possibly increase. If you are invested in many different types of assets, as in the above two simple examples, when one loses, quite often another will win (so to speak).

All of this reminded me of the importance of regularly communicating with clients, particularly when ‘worry’ is prevalent in the press and news due to significant events such as those we are witnessing at the moment. It is also a reminder of how important it is for clients to fully understand what they are invested in.

Almost no clients have contacted me worried about their investment values recently, which led me to reflect on the reasons why.

Importantly they understand markets go up and down periodically but in the long term their portfolios should increase in value. When we started working together, we undertook a thorough due diligence process to understand the investment journey they wished to go on and set up the strategy accordingly.

I provide clients with knowledge and understanding of what we are doing, what can happen, and what is most likely to happen. Essentially, a lot of time is taken at outset to inform and educate them in the solution being proposed, warts and all.

Many of my clients have been working with me for a long time, as a result of which we have been through many of these ‘ups and downs’ before, as well as other life events. They trust my process and advice.

All of this means people don’t tend to worry about their portfolios because they know they are in safe hands. With all the other stresses in life, this is something you cannot put a price on, particularly in retirement.

If you are at all worried about your financial arrangements, please feel free to get in touch for an impartial review.