Planners on the impact of Russia’s Ukraine invasion

The Coronavirus pandemic helped prepare clients to brace themselves for the impact of unexpected events such as the Russia’s invasion of Ukraine, according to leading Financial Planners.

While Financial Planners we spoke to say they have had some calls from clients worried about the war, they are not being inundated with calls, planners have told Financial Planning Today.

Financial Planners have not seen too many clients with major concerns about the impact of Russia’s invasion of Ukraine, but most have seen some contact from clients looking to talk about it.

Darren Cooke, Chartered Financial Planner at Red Circle Financial Planning, said the war not yet a topic of concern for many clients.

He said: “I have had a handful of clients call or message worried about the falls in their investments, these tend to be those who are comparing only to the high points in valuations we saw in December last year. Looking over a full 12 months the losses, if any, are quite small for most clients, sub 5% level.

“Most are not even calling because we have seen this before only 2 years ago when Covid hit markets and they remember that.”

For those clients who have called, Mr Cooke is reminding them to think longer term.

He said: “Those that do call I’m point to the longer-term valuations and gains in their portfolios, the danger of trying to time markets and actually asking them what do you think we should do, what is the alternative?

“With one I was actually quite blunt and said ‘if I had a magic answer don’t you think I would have contacted you rather than waiting for you to ring me? and if I did frankly I’m sorry but I’m not talking to you from my office in rainy Derbyshire, If I knew stuff like that I’d be talking to the mega rich from my villa in the Bahamas.”

Rob Lewis, director and independent financial adviser at Celtic Financial Planning, has also seen some clients get in touch with concerns about the impact of the war on their Financial Planning.

He said: “A hand full of clients have been concerned about the war and have got in touch, we’ve tried to be proactive and provided regular commentary via our newsletter service and on YouTube via our monthly market updates.

“For those in contact we are addressing their concerns and encouraging them not to make knee jerk reactions, our Financial Planning has always focused on investing for clients only where suitable.”

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Informed Choice have also had only a small number of clients contact the firm but is preparing a client investment update webinar on the topic for this afternoon.

Most calls from clients have been to check they do not have any exposure to Russian companies in their portfolios. However, due to the firm’s impact investing overlay client’s exposure to Russia was less than a fraction of a percentage in most portfolios.

Martin Bamford, Financial Planner at Informed Choice, said: “Clients don’t seem too concerned about the market uncertainty and volatility prompted by the Russian invasion, although we work hard to keep them well educated about the importance of long-term investing and sticking to the plan, despite short-term events.

“Our anti-money laundering process includes checking sanction lists, and our administrators will be continuing to do this periodically for existing clients. We don’t have any clients who are Russian or Belarusian. These regulatory and legal requirements are a key component of being a regulated firm and something we must all take extremely seriously.”

Tilney Smith & Williamson has seen events in Ukraine being a concern for some clients.

Jason Hollands, managing director of corporate affairs, at Tilney Investment Management Services, said by communicating proactively in clients the firm has not had to deal with too many client calls on the subject.

He said: “As we also saw through the pandemic, times of crisis are when it is important to be proactive in communicating with clients, both at the individual financial planner and investment manager level, but also as a company. Our CEO has been sending a weekly email updates to clients since the Russian invasion began.

“A key message to clients has been that it rarely makes sense to take hasty investment decision in periods of heightened volatility. In fact we have provided clients with analysis of 25 geopolitical crisis – starting from the Cuban Missile crisis – that demonstrate how early equity market declines are typically short-lived (one month on average) to illustrate the risk of panic selling. The vast majority of clients understand this and, of course, they have of course had the fairly recent experience of the March 2020 coronavirus crash as a reference point.”

Tilney has had “negligible” direct exposure to Russia as its emerging market positions are largely through global funds and Russia was already a tiny component of the MSCI Emerging Markets Index prior to its invasion (and has now been kicked out of the index entirely).

Financial Planners are also not worried about the impact of sanctions on their businesses.

Mr Cooke said he is not at all worried about Red Circle being entangled in Financial Conduct Authority (FCA) action against firms that it does not think have taken enough steps to ensure they comply with government sanctions on Russian investments and doing business with Russia.

He said most of the worry will fall on asset mangers and providers: “I had no direct exposure to Russia in portfolios, at most there was a fraction of a percent exposure to Emerging Europe (c0.4%) which might have included Russia, so probably less then 0.1% of a portfolio. Fund managers, and index funds, will be taking the action to exclude Russia not me.”

Mr Bamford said whilst FCA enforcement is not a significant concern for Informed Choice, he is disappointed about the communications from asset managers and fund providers around the war.

He said: “Communications from asset managers and fund providers have been minimal. While this is an emerging situation, I would expect better communication from fund providers especially, who can play a key role in keeping investors educated.”

Mr Lewis is a little more concerned about the potential for FCA fines, but believes Celtic Financial Planning is doing all it can to make sure they are not caught in the crossfire.

He said: “We have constantly reviewed holdings, along with working with our investment partners and managers to see what they are also doing, we believe we have been well positioned with good diversification and liquidity.

“FCA fines are always a worry for a firm, especially smaller IFA’s like ourselves, the best way we can deal with this is be proactive and work with our partners, such as Threesixty who provide a fantastic compliance support service.”

Informed Choice have also chosen to focus some of their local community efforts on looking into help Ukrainian refugees.

Mr Bamford said: “As a business, we are still trying to determine how to best support Ukrainian refugees, and I spent some time on Saturday morning collecting in our High Street on behalf of our local Rotary Club. Through links to Rotary Clubs in Poland, they are funding a hotel with 200 rooms for refugees, and also operating a train between Kyiv and the border. It’s our understanding that the humanitarian aid effort desperately requires cash rather than goods.” 

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