Reassuring clients on geopolitical risks
It is crucial to distinguish between short-term events and long-term shifts when it comes to assessing geopolitical risk, according to a panel.
Speaking at the Institute of Managed Account Professionals (IMAP) Independent Thought conference in Melbourne, the panel discussed the implication of geopolitical risk on asset allocation.
Chris Carrodus, senior asset consultant at Evidentia, said: “There are geopolitical events which are short-term and isolated such as cyberattacks and local elections and then there are geopolitical shifts which are long-term trends. We are more interested in the shifts.
“A shift we are seeing, which we have been seeing since before the pandemic, is around trade tensions between the US and China. It will be a slow-moving thematic shift.
“Even recently, you have seen a further crackdown on technology sharing between the US and China as an example of that and these themes are becoming a little bit more predictable.”
Matthew Swieconek, head of investment relations at Findex, said the firm had seen more clients raising geopolitics as a concern for them as they were worried by coverage of events such as the Russia/Ukraine war.
“We’ve got 130 advisers around the country and they are fielding these questions everyday because they see all sorts of press and have concerns as a consequence.
“We have tried to keep it very simple by saying that yes, the catalyst is different this time but it was also different during COVID-19 and during the Global Financial Crisis. The catalyst is different each time.
“This time it is different because we have had fixed income and equities fall in tandem which is unusual but we’ve been through these things many times before and the outcome is typically the same.”
David Berthon-Jones, joint chief investment officer at Aequitas Investment Partners, said it was important in light of this that investors spread their diversification “far and wide”.
“That’s the tagline we are telling our clients, spread capital far and wide across geographies, across styles, across sectors to make sure there are no ‘hero trades’ in the portfolio.”
AUTHOR
Laura Dew
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
