We hope you and those close to you are still keeping safe and well.
The slight easing of the UK Lockdown has had a positive impact for the markets with the FTSE closing on 28th May at 6218, the highest so far during the Coronavirus Pandemic. Although none of our clients are solely invested in the UK, the media tends to use the FTSE 100 as a measure of market performance. We saw dizzy heights of 7500 in December and January which rapidly fell to just below 5000 at the end of March. With this being a global pandemic, global diversification, which usually provides a buffer for loss, in this case did not help. As the Covid numbers increased worldwide, the stock markets fell. To see them rise again as Covid numbers reduce allows us to breathe a sigh of relief and be cautiously safe in the knowledge the markets do rise as well as fall.
As you will know, we only advise clients who are investing for at least 5 years and all portfolios that our clients invest into are now back in profit over a 5 year period; some of them up to 11% growth during that period. I know some of you may not have been invested for 5 years yet, but I hope it gives you some confidence that time in the market does allow you to not only recoup any losses made, but also continues to provide growth over and above inflation and deposit based accounts, providing you do leave it invested long term.
For most portfolios there is still some way to go before the markets recover their losses fully, but fund managers are discussing the positives to come from this pandemic and we thought it would be useful to share these with you:
Businesses have had time to adapt and pause to realise where they are potentially wasting money. High rise office blocks and their related costs (Rent, Water, Electricity etc), employee international and domestic travel, seminar and training venue costs and postal costs etc. Employers globally have reported a significant reduction in these costs due to lockdown and this has led them to review their outgoings. Do they need to agree to first class international travel when the meeting can be completed via Zoom? Do they need to pay for high rise office blocks in central London or would a small office suffice with flexible home working being more popular.
Many employers have reported that some self-sufficient employees can work more productively at home due to less distractions. Group video calls have allowed teams to feel connected without being in the same office. Productivity in some industries has increased by making the use of latest technologies.
Some sectors, such as telecommunications, healthcare, pharmaceutical and supermarkets have seen a significant increase in profits. Not having to entice with special offers is helping profit margins increase and demand is certainly still out stripping supply.
The media loves to portray the negatives and we certainly cannot ignore the human cost, the risk of large scale unemployment, a recession and some sectors being so damaged from this that they might struggle to make it back to profit at all. But for every negative, there will be a positive and where one business dies, another is created. We started the year in a very strong position, an overflowing government purse, very low unemployment, and a strong market. All of that has been turned on its head but at least we started from a strong position, meaning we have a hill to climb to return to normality, but it isn’t as steep as it could have been.
Northfield Wealth – A Team and Business Update
We are not going to sugar coat it. This has been the toughest 10 weeks in our business’ history. It is one of the toughest I can remember in my 20 years financial services history, although I will be honest, the financial crisis felt worse in financial terms for clients.
We have worked incredibly hard to ensure that our whole team have remained employed without furlough. The whole team has adapted very well to working from home and as required by our regulator we have kept the office open but closed to clients. One staff member has been in the office per day to deal with urgent post and scanning and we will slowly introduce staff back to the office following all government guidelines. Our overall aim is to keep the business alive and protect the health of our team and our clients. Clients are also adapting really well to Zoom calls and technology has allowed recording of those calls to be very helpful for team training.
Our advisers are spending a lot of time in client ‘Zoom’ meetings along with a lot of continued professional development. The world is changing, and it is very important that we keep up to date with the changes. We use state of the art software that allows us to track investment performance, mortgage lender interest rates and general industry news. Things are changing daily, and we strive to be armed with all of the latest information to ensure our clients benefit from this expertise. There is going to be some very interesting data in the next 6 to 18 months and it is at times like these that people really need an Independent Adviser to ensure they are making the right choices with their financial affairs. Tax shelters like Pensions and ISA’s are going to be incredibly important in the future.
One area that has been a huge comfort to clients is a review of their cash flow planning. Cash flow planning uses client’s own expenditure figures along with all of their financial information to let them know if they have enough or too much money. When your Investments and Pensions go down in value due to stock market performance, it is natural to feel that this might have long term impacts on your financial future. Clients have asked questions such as, ‘Do I need to go back to work?’, ‘Is retirement at 60 off the cards now?’ A quick review of their cash flow planning, even with a reduction in their investment values often shows a much more positive picture than the client imagines, and more often than not they can still comfortably afford to meet their financial goals.
If you haven’t already, one of the most important things you can do during these times is to tick off any items on your Financial To Do List. Make a Will and Lasting Power of Attorney. Do a Budget planner to see how much you spend per month. Review the interest rates on any savings and debts you have. If you need help compiling a financial to do list email us firstname.lastname@example.org and one of the team will call you to ask a few questions and we will email your very own Financial To Do List.
Overall, we are feeling even more optimistic about the situation than we were before. Covid19 numbers are reducing, the world seems to be starting to turn again, the markets are recovering, and a new world is emerging.
We will continue to support our clients in anyway we can.
Clare, Mark and the team at Northfield Wealth Ltd
Always here to help you achieve your financial goals.