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Brexit

Advisers turning increasingly cautious in lead-up to Brexit

 

  • One in three advisers say they are more likely to recommend defensive stocks because of Brexit, up from 1 in 10
  • 19% of advisers are looking at opportunities to invest overseas, up by over 10%
  • Only a tiny minority of advisers [3%] aren’t investing in an EU jurisdiction because of Brexit

Advisers are increasingly recommending a cautious investment strategy due to Brexit, according to new research1 from Canada Life. Around one in three advisers [30%] say they are more likely to invest in defensive stocks as a result of the referendum, up substantially from one in ten [10%] a year ago.


The results reveal the difficult choices faced by advisers when it comes to recommending a financial strategy.


Richard Priestley, Executive Director at Canada Life, said:

“Although we are only a few months away from B-day, the impact remains far from clear. Advisers continue to plan client portfolios that address the known and unknown alike. Invest too much outside the UK and you could miss out on a roaring economy. Stay in, and potentially watch the value of your clients’ investments fall. With Brexit looming nearer, our research suggests more advisers are likely to take a cautious approach until the impacts are better understood.

“While the exact consequences of Brexit continue to remain unclear, it’s likely that in the event of a hard Brexit we would see some devaluation in sterling. That would benefit those businesses with overseas revenues, something advisers may need to keep in mind in terms of their clients’ financial strategies. In fact, as total UK exports last year were worth around £616 billion, you can get an awful lot of exposure to overseas revenues by investing in UK companies that export.”

Increasing appetite for International investments

While caution is increasingly the watchword, that isn’t translating into a fear of international investments. Among advisers, 19% are looking more at opportunities to invest overseas, up by over 10% from a year ago [from 7% to 19%]. Only a tiny minority of advisers [3%] aren’t investing in an EU jurisdiction because of Brexit.


Richard Priestley said:


“It’s not surprising that international markets are looking increasingly attractive, as advisers fear an adverse impact primarily focused on the UK.

 “Nonetheless a substantial number of advisers [30%] say Brexit has had no impact on their investment approach. That’s the same percentage as those that have become more cautious – even among financial advisers Brexit is apparently capable of dividing opinion.”

1. Source: The Canada Life Hot Topics survey was conducted in August 2018 with responses from some 227 professional advisers.

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Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.