Your clients shouldn’t worry about Brexit.
But, as with any global event, you must be ready to answer people’s questions and alleviate market fears during the next few weeks.
To do this, get up to speed on why Brexit happened and how it’s going to impact markets over the medium and long term. Then, boil that information down into key points that are relevant to clients who have global exposure.
“This referendum shouldn’t have caught anyone off-guard, but it did,” says Todd Peters, CFP, a licensed advisor with IPC Investment Corporation in Winnipeg. “Markets don’t like good or bad news, and they had their minds made up in a different direction.”
If clients call, he’ll first tell them to avoid over-reaction. “I will definitely get some calls, but I’m gathering news and research items so that I’ll have that information available in case anyone asks about the impact of Brexit.”
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He will also revise his client slideshow, which has included information about Brexit for the last two quarters. “I’ve talked about the possible implications for markets. As a result, my clients won’t say, ‘What? I didn’t know there was a U.K. referendum.’ This slideshow is created based on quarterly reports from my firm and is for people who like to go through economic information.”
Susan Daley, an investment advisor at PWL Capital in Waterloo, Ont., says her firm hasn’t received any calls so far—and that’s a good sign. “We’ve set up people’s portfolios so [they] suit their needs for the long term. Things like Brexit aren’t going to have a huge impact. But if someone calls and if their portfolio is down a few percent, we can put that into context. We aren’t sending any additional communications.”
A helpful habit is subscribing to email lists and news alerts, so you don’t have to go digging for news, says Peters. “These [emails] are a usually a waste of time and I get a few hundred a day,” but he automatically files them in an “Industry news” email folder. “Then, when something like this happens, I can scan those emails to get up to speed.”
Plus, in the next few days, his firm will provide a two- to three-page document that all advisors can use with clients—the chief investment office creates this document. Peters won’t send this en masse but will offer it to people who are globally invested and who reach out.
“I don’t push a lot of information on my clients,” he explains. What’s key is “this document will be compliance-approved. The problem with writing our own commentaries is a lot of information I’m getting now is internal and isn’t client-focused. You have to aware of that.”
Going forward, explaining what’s going to happen next for Britain and the EU will be helpful. “[Investors] need to know there’s now a two-year process of Britain exiting the EU and that the current prime minister is staying on until October.”
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Peters is also interested in reviewing the decisions of international equities experts he works with. He says his “clients need to know I’ve teamed up with [experts] that are on top of this situation. I know what these managers have been doing leading up to [the referendum]; there’s been a flight to quality and they’ve been proactive. I’m also sitting on more cash in my accounts than I have historically due to these managers’ decisions.”
As he learns more, he’ll assess “whether what these managers have been doing to prepare for Brexit has worked. If so, that’s the win. Then I can say something like, ‘Markets dropped 3% when [Brexit happened] but your account only went down 0.25%, so you don’t need to worry.’ If portfolio managers haven’t already factored a [British exit] into their planning, it’s too late.”
Finally, he suggests educating interested clients about the EU, which may be helpful if more referendums occur and as the market impact is fully realized. “The one problem with this [event] is quarterly statements will go out as of June 30th. We’re giving a snapshot of people’s portfolios in six days and, up until now, the quarter was looking good. This event could transform these statements, and all clients will open these reports. Our reports will include market commentary and analysis of Brexit.”