Helping Our Clients Navigate Through Turbulent Times

Given the news this week, we wanted to take this opportunity to provide all our clients with a special update on market and economic events and outline how we can help navigate through these turbulent times.​

An eventful and turbulent week

This week has seen financial markets and economic events making front page news. We understand that stories about inflation, interest rates and financial markets can be complex at times and be a cause of real concern for many people.

The big news came with the UK government’s ‘fiscal event’ last week. This turned out to be more significant than almost any budget in living memory, with the scale of changes announced and lack of independent assessment as to their impact spooking markets. This saw Sterling fall in value, government borrowing becoming significantly more expensive and the Bank of England stepping in to try to calm markets and avert a major financial crisis. Despite, these outcomes, the government appear to be unwavering in their approach to tax cuts and a massive increase in borrowing. Whether this is sustainable politically and/or economically over the new few weeks and months remains to be seen but these decisions are already having real-world impacts. A weaker Pound is likely to mean higher inflation, mortgage rates are already rising and some deals have been pulled from the market over the uncertainty and there are fears the Bank of England will need to raise rates further and faster. Some analysts have concerns that interest rates towards the top of the expectation range could prolong and deepen the recession in the UK, leading to a fall in house prices and increased unemployment. We continue to monitor events closely and will provide further updates on these evolving issues over the days and weeks ahead.

Our thoughts and general advice at times like these

History is littered with significant political, financial and economic events. These can be shocks, periods of difficulty or times when extreme volatility and unpredictability are the norm. Even in recent years, we’ve lived through the Great Financial Crash, the outbreak of Covid and are now have a war in Europe. Each of these events has caused turbulence in financial markets with the economic impact causing real difficulties for many people.

The events this week come against a troubling economic backdrop. The UK (along with many other countries) is suffering from high inflation, tight labour markets, ongoing supply chain issues and rising interest rates. These factors have caused many knock-on impacts for many people and meant it has been a difficult period for almost all investors. On top of these difficulties, the shockwaves sent through the financial system by the ‘fiscal event’ last week created some further causes for concern.

During difficult periods like this, we have kept the messaging to our clients consistent. We appreciate that it may be difficult to focus on the longer-term but this has proven to almost always be the best strategy. Those making knee-jerk reactions to disinvest their money, change their financial products or panic rarely do better than those that take stock, remain calm and continue on their path. It may be that recent events mean your financial plan may need to be amended and updated and this should be done, but we would always advocate an ‘evolution rather than revolution’ approach to managing finances.

It is also worth noting that all of this negative news and the economic and financial difficulties the UK is experiencing is already ‘priced in’ to investment markets. In other words, the level of the markets now reflects the consensus view of the current situation as well as the expectations for the future. Even if things are difficult in the coming months, if they are less bad than expected, markets are likely to rise and investors will see positive returns.

We’re here to help and support all our clients

We’re here to support our clients at all times. This is particularly the case when times are tough and many people have concerns and worries. Below is a list of useful resources, advice and points to note that we would like to reiterate to help support you during this difficult period:

• We are here to support you whenever you need it. As a NorthStar client, you can contact us at any time should you wish to discuss any of the recent financial events and how they impact you and your finances. Alternatively, you can book in a meeting with your NorthStar financial planner any time you wish.
• We’re committed to regular client communications to keep you updated and informed. From our regular blog, digital magazine and social media posts plus our monthly client bulletin, we aim to keep all our clients abreast of the latest news and developments and to provide our analysis and insight on events.
• This is a good opportunity to remind you that we offer all clients a full annual review each year. We encourage all our clients to take up the offer to talk to their NorthStar financial planner every year and this is particularly the case when the financial system is in a state of flux. We email all clients when their annual review is due with their ‘Annual Review Statement’ which includes a host of useful information and the option to book in a time to talk with your financial planner. An annual review is a great time to take stock, reassess your goals and review your investment performance. With so much change going on in the world, it really is important to take advantage of the annual review offered.
• At NorthStar, we ensure all our clients’ investments are highly diversified and invested in some of the best-performing funds available. We review all portfolios regularly to ensure that we minimise risk and provide the best long-term growth. This week, we’ve heard of some investors who have lost as much as 30% of their money during 2022 alone though having significant exposure to certain asset classes such as ‘UK Gilts’. We ensure our clients are never exposed in this way. So far, 2022 has been a challenging year for all investors but it is pleasing to see how resilient our portfolios have been during this period.
• We have created a range of informative and educational financial guides which can help explain some of the more technical aspects of the news. This includes ‘Stay on Top of Rising Interest Rates‘ and ‘10 Tips on Investing in Tough Times‘ amongst others. We would encourage you to read some of these guides if you have the time. We also have a useful ‘jargon buster‘ which explains a lot of the financial terminology that is being used frequently in the current climate.

If you would like to discuss any aspect of your finances or how recent events may impact you, please contact us at any time. Once again, we are here to support you in any way we can. We aim to provide all our clients with additional clarity and confidence to help navigate these turbulent times and plan for a more certain future.