There is no denying 2024 has been an eventful year. Major elections in the UK, Europe, and around the world, rising geopolitical tensions, and economic concerns over high interest rates and inflation shocks are just some of the key events contributing to uncertainty for clients.
One way or another, clients have been overwhelmed with news and information, much of which has not always been helpful.
Attention in the UK is now focused on the Budget, with wild speculation over its content a mainstay in the media. This is both unhelpful and confusing for advisers, let alone clients.
Market noise could not be louder, with the US presidential election also adding to the unpredictability mix. The contest is dominating headlines across the pond as polling day on November 5 rapidly approaches.
It is times like these where the invaluable role played by financial advisers and planners is brought sharply into focus. Advisers are essential for helping clients navigate uncertainty and potential market volatility, keeping them on track to achieve their long-term goals.
We know from our own adviser research that helping clients stay invested has been a major and persistent concern.
So, what does the market noise from upcoming events mean for advisers and their clients?
Noise can distract from the positives
With cash now appearing more attractive than it has in many years, advisers have told us they are receiving phone calls from clients to ask why they should remain invested, noting that “surely they would be better off in cash”.
Headlines and commentary on key events are often clouded by unhelpful speculation.
In the run-up to US elections, market watchers often speculate which candidate may make or break the economy, with shock waves to follow around the world. Yet, the data tells a different story.
Going back as far as 1933, stock markets have tended to rise no matter which political party is in the White House. Since the second world war, there have only been two presidential terms when the US market ended lower than it began. In each case this was for a very specific reason.
Unhelpful noise is common ahead of key events, not just the Budget or the US election.
But look past the noise and the investment story of 2024 is quite different. The Morningstar Global Markets Index increased by more than 30 per cent in the year to the end of September 2024, while the Morningstar US Market Index was up by around 35 per cent over the same period.
Closer to home, the Morningstar UK Index returned roughly 25 per cent growth over the last year.
As a result, it is clear a flight to cash rarely paves the way to good outcomes.
The reality is no one really knows what is going to happen; financial advisers can only work with facts – details of the rules and limits, and any timescales. In the case of the Budget, these will be made clear on October 30. Anything before then is simply a distraction.
