Financial advisers reach out to clients as stocks plunge in Brexit wake

Communication themes boiled down to 'keep calm and carry on,' not letting temporary volatility affect long-term plans

Jun 24, 2016 @ 9:26 am

By Liz Skinner

Financial advisers pressed the 'keep calm and carry on' message to clients Friday as the global markets reacted wildly to the United Kingdom's surprising vote to leave the European Union after 43 years.

“We are explaining to clients that we were prepared in advance with an investment strategy that did not depend on us guessing correctly one way or the other for Brexit, or any of the other big events upcoming this year,” said Ted Halpern, president of Halpern Financial.

Without trying to make light of the Brexit vote that caused a selloff in U.S. and other markets on Friday, Mr. Halpern suggested clients consider a leisure trip across the pond.

“After all, your dollar will go much farther now with declines in the British pound,” he wrote in an email to clients Friday.

Advisers said clients seemed interested in the events occurring overseas and appreciated the communications.

Some were resigned to the hit their investments may take and others asked about buying opportunities.

“I agree, of course, with staying the course," one client responded to an email sent early Friday morning by Dave Yeske, managing director of Yeske Buie. "In fact, I would be interested in your take on when it would be appropriate to buy a bit more, and if so, how we do that?”

Mr. Yeske said he responded to the first incoming client email about the Brexit vote at 2:20 a.m. ET, calming someone nervous about the impact on her 401(k) investments. Mr. Yeske sent out a note to all clients a few hours later, suggesting the market reactions over the next week should not be extrapolated far into the future.

“Is it true that this development has negative ramifications? Yes,” the note said. “Will the more apocalyptic predictions now spilling forth come true? Almost assuredly not.”

(More: Allianz's Mohamed El-Erian sees 'common element' between Brexit vote, negative rates, strange politics and Fed policy)

At FJY Financial, the firm proactively posted a detailed analysis of the situation on Wednesday.

If further communications were needed, Jon Yankee, an FJY Financial partner, said they would remind clients about the long-term nature of their goals.

“We would also remind them that their portfolios are globally diversified so that they can get through times like these, and that the markets' presumed drop today (and next week?) does not have much to do with the fundamentals of economic and business markets,” he said Friday morning.

News that 52% of Great Britain's public chose to leave the European Union, and the announcement soon after that Prime Minister David Cameron would step down, shocked many who believed polls that suggested a majority of the British public would vote “Bremain” to stay in the EU. Markets on Friday showed again that they don't appreciate surprises.

A stock selloff hit the Dow Jones Industrial Average and S&P 500 Index, both of which had fallen about 3% by midday Friday. The FTSE 100, an index of British blue-chips, was down about 4%.

Because of mixed reactions from clients, some advisers took multiple tacks, including addressing the impulse to trade during turbulent markets.

“Clients are not unreasonably concerned about Britain leaving the EU,” said Mark Snyder, an adviser with an eponymous advisory firm. “But we cautioned against any overreaction and not to react to what's likely to be short-term volatility.”

RegentAtlantic's investment team was up at 4:30 a.m. ET on Friday working on its communication to clients, and gave advisers talking points in advance of Thursday's vote, said Chris Cordaro, managing partner.

The firm told clients before the markets opened on Friday that “trying to trade in extremely volatile markets is very dangerous.”

Rose Swanger, principal at Advise Financial, said she reached out to clients prior to the vote.

“If they have newly contributed IRA money, they might get a second chance to do some bargain hunting in case they missed the February dip,” she said. “And here it is. I want to emphasize it is not market-timing, but taking the best opportunity for one's investment.”

Not all advisers felt the news warranted a proactive approach alerting clients.

Some advisers thought contacting clients on Friday about the Brexit results would actually create investor distress.

“We do not have any plans to communicate en masse to our clients,” wrote Andrea Eaton, an adviser with Cornerstone Financial. “We think if we react, that means client should react (panic), and that's not the message we want to send.”


But big firms on Wall Street weren't taking any chances. They prepped advisers early Friday morning for client concerns sure to stream in.

Morgan Stanley's Mike Wilson, chief investment officer for wealth management, held a call with the firm's advisers Friday morning, saying it's important not to overreact in fast moving markets and noting that central banks will be highly accommodative to stabilize market, according to spokeswoman Christine Jockle. The firm has set up a dedicated research site for Brexit that will be updated for advisers throughout the day, she said.

Bank of America Merrill Lynch also set up an intranet site called Brexit Central to update advisers with the latest information, according to the firm's spokeswoman Susan Atran.

Merrill Lynch, Wells Fargo & Co. and UBS Group AG also had calls with their advisers to help them navigate the news and ensure clients stay calm, according to spokespeople for the firms.

At the end of the day, it's important to remember that this is just the beginning of what will be a long process for the EU.

According to Wells Fargo Investment Institute, the registered investment advisory arm of the bank's wealth and investment management division, it should take at least two years for the U.K. to make its exit from the European Union, and until then, Britain will be bound by the laws and regulations of its current membership.

Jeff Benjamin and Christine Idzelis contributed reporting to this story.


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