Keep calm and stick to your Plan

24th June 2016

A few days ago Neil was asked, by Nucleus, to comment on how we had prepared for a possible Brexit.  Now that the result has been confirmed we thought we should share the gist of his response to the question.

“We have not done anything to our clients’ portfolios because we can’t predict the future and therefore why would we make changes to portfolios that we have already designed the best we can to cope with movements with markets?

The portfolios are long-term investments and over that investment journey there will be things that happen.  Some of those things will be pre-warned like Brexit. Some of the things will be completely unexpected;   the markets will either go up or down but nobody knows in advance what impact those changes will have. So we think it is a waste of energy to attempt to predict or react to short-term market “events”.

The important thing is to have a plan, and have a set of beliefs that drive your investment policy. If you have a plan and a properly constructed investment policy any changes you make will be to do with long-term changes not short-term blips.

I don’t expect that all advisers will share the Fortitude approach.  Hindsight is a wonderful thing and the passage of time may prove others were right and we were wrong. But I want to stress, we have an investment philosophy that we share with our clients. If the clients didn’t agree with this, why would they invest with us?  Our clients have been getting a consistent message from us, we don’t chop and change for the latest fad, and presumably clients are happy with the results they’ve seen so far and are reassured with our approach.

If the UK does vote to leave the EU, the UK equity market could (if you believe in the doomsayers) collapse quite rapidly.  If we were to react to that it would be like us shutting the stable door after the horse has bolted.

We will continue to review and rebalance portfolios in accordance with our investment philosophy and in the context of our clients’ Financial Plans.”

This morning the votes were counted and the results announced.  The “Brexit” campaigners have persuaded the majority of voters with their argument and the Prime Minister has announced that he will resign to make room for a new leader to negotiate the terms by which the UK will leave the EU.

It is impossible to say with any certainty what the long-term implications will be.  In the short-term markets will, no doubt, continue to react as they always do – by going up or down.

It is at times like these that we all need to demonstrate Fortitude and stick to the plan that we have developed.