As you’ll know if you’re reading this, working in our industry means friends often come to you with questions about their finances.
At my age – mid-50s – and with most of my friends within, say, 10 years on either side of that, it’s happening more and more often.
In the last week alone two friends have got in touch to ask me to help them find a financial adviser. The first, who we’ll call Nadia, is in her mid-40s and has worked for a large company for years. Now, she has quit her job and is going back to university to retrain.
She told me she has been running her own stock portfolio – something that always fills me with mild alarm – but it takes up too much time and she does not want to deal with it anymore.
She viewed this portfolio as her pension, but realises she needs something more formal, and someone to sort that out for her.
The second friend, who we'll call David, has worked for several companies over the years, like many people. He is in his 50s and it has recently dawned on him that retirement is not too far off. He wants to consolidate the pensions from his various employers and get a better sense of where he is now and where he needs to be.
What do Nadia and David have in common? They’ve reached the moment of truth that often causes people to seek financial advice for the first time.
It is not the easiest period for that to happen. With interest rates higher than they have been in a generation and geopolitics more uncertain, advisers report they are finding it hard to coax existing clients off the sidelines.
Making their case to new clients, without the benefit of the trust built up over the years, is even harder.
But clients do not have these moments of truth at convenient times.
Often the trigger is a life event, as with Nadia, a change of work circumstances, or perhaps an inheritance. Or, as with David, it is the realisation that the years have slipped by and making a plan for retirement has quietly become urgent.
There is a whole group of people out there having these moments every year – not because of global events or what is happening with interest rates, but because of their own age and stage of life.
Meanwhile, existing clients are still experiencing their usual problems even in a turbulent world. And the clock is ticking: their goals can’t be put on hold to wait for calmer waters.
Regardless of the environment, the tried-and-tested tenets of investing still hold: diversification; time not timing; dripping money in if you are uncertain. Equities still beat inflation over the long term.
