Advisers seek external support during geopolitical uncertainty

A majority of financial advisers believe additional assistance is crucial when communicating geopolitical tensions to clients.

New research from Viridian Advisory, which surveyed its adviser network of 41 advice practices with more than 100 advisers, has highlighted the impact of global events on advisers and their clients.

As geopolitical concerns persist, 73 per cent of advisers surveyed stated that augmented support to navigate ongoing global tensions when educating clients is necessary.

“Advisers have a number of resources available to obtain information about these types of events, from platform providers, fund managers and dealer group services,” said Brett Arnol, general manager of Viridian Advisory.

“The challenge is converting technical information to investor-friendly communications, as this can be time-consuming for the adviser. We all have a role to play in making this step easier for them via simpler communications, which ultimately benefits clients.”

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Meanwhile, Australian investors expressed a relatively resilient outlook on these events, with  56 per cent of advisers reporting no client enquiries regarding the current economic backdrop.

Viridian Advisory also noted stability within client sentiments, with 55 per cent of advisers saying clients had unchanged or neutral bearish views. On the flip side, over 40 per cent stated their clients displayed a more pessimistic perspective.

Arnol underlined the broader role of advisers in supporting clients’ overall wellbeing and financial security, beyond just investments.

“During geopolitical tensions, there’s often a surge in uncertainty triggering potential stock sell-offs. Yet, within our network, our clients remain steadfast,” he observed.

“Our clients are oriented towards long-term investments, a stance reinforced by the support our advisers provide. However, amidst this volatile landscape of uncertainty, market fluctuations, and escalating inflation and interest rates, there’s an evident need for additional support.”

Arnol encouraged advisers to guide clients through difficult periods and maintain focus on their long-term goals, rather than making rash decisions due to short-term market conditions.

“Financial advisers have assumed an increasingly pivotal role, extending their support beyond conventional financial planning practices,” he continued. 

Additionally, Viridian Advisory described advisers as “crisis interveners” during tumultuous times with the certainty they bring to clients.

Looking ahead, Piers Bolger, Viridian Financial Group chief investment officer, expected cash rates to likely dominate 2024.

He explained: “While geopolitical risks along with ongoing military conflict will continue to impact financial markets, our key focus as we head into 2024 and the one that we believe will have the most significant impact will be the outlook for cash rates and by association inflationary expectations and the direction of bond yields.”

However, the CIO expressed an optimistic view for investment portfolios as most central banks across the globe reach the end of their rate tightening cycle.

“This is fundamentally positive for multiple asset classes – equities, bonds, property, real assets – in our view, and we believe this will translate into higher, more synchronised investment performance across financial markets through 2024.”