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Managing investments in a crisis

25 August 2020: These have been extraordinary times and not always investment friendly, but what can be done to stave off further shocks? As part of a series of sponsored articles, ICAEW Insights ask Dr Adam Parker, Head of Midlands Investment Management at Tilney.

With recent uncertainty and change, many of Tilney’s senior professional and senior executive clients are asking how to safeguard their financial future and feel more in control.

“Expect change,” says Parker, commenting on the prevailing environment for managing investments. “Tax, pensions, any investment – it is a good time to talk about all of it.”

He continues: “It is very easy at times of significant market stress to do nothing at all. We want to talk to people who are willing to take action. We think it is important to speak about potential changes and believe there are two aims.”

Parker explains that these aims are, first, to get the big decisions right so that investors make proper use of pension reliefs and capital gains allowances, for example.

The second aim is that investors don’t lose sight of their longer-term plan. If COVID has taught us anything it is that nothing is certain, he comments: “We have to look after ourselves and our families.”

He says: “Once the big-picture questions are answered, our investment managers will work with clients to be able to achieve their objectives with as little volatility as possible.” However, at a time of market dislocation, this can be easier said than done without expert guidance.

“Our investment philosophy is to preserve and grow the real value of clients’ capital over time, given that markets go down and up and money can be lost. Our aim is to find investments that can withstand significant periods of uncertainty,” he continues. For example, shares in companies that sell their products and services successfully regardless of market conditions tend to be more resilient, whereas those that require strong market conditions to meet their objectives can find it more difficult in a crisis.

Tilney’s conversations take place with a broad range of clients but with recent uncertainty and change, the firm is increasingly supporting and advising those with specific and more complex financial needs. The first are senior executives for whom pension changes could have a significant impact. The second are partners in professional services organisations, who have experienced the pressure of pandemic conditions both within their own practices and among their clients.

The third is business owners who – whether they have battened down the hatches or soldiered on through the crisis – will need to review their new circumstances and work through the various scenarios. They will be evaluating their assets, equity investments or even contemplating an exit. They will all need to have conversations based on facts and evidence.

What these groups have in common is the imperative to make decisions now so that they are well placed when COVID is no longer – or is less of – an issue.

“It boils down to getting your house in order”, says Parker. “We have always said it is important to do this, but the last six months have really brought this need into focus.”

If nothing else, this pandemic has brought a sense of urgency to much of life, whether at home or at work. We have been concerned for everyone’s well-being, wrenched from our offices, made to stay at home, shifted from physical to virtual and tuned in to government messages like never before.

“All of this has made us feel like decisions need to be taken sooner rather than later,” says Parker. “We know that there will be an Autumn Statement and The Chancellor will have to bridge the deficit.”

Whether individual investors focus on pensions, capital gains or any other assets and investments, making decisions in the context of the world we live in now, can only be a good thing.

“There is an opportunity to act now,” concludes Parker. “And professionals and business owners would be wise to do so.”

If you would like to find out more about how Tilney can help you, please go to Tilney Time to Talk