“Investors have it within their grasp to survive rocky road,”

As rolling price shocks increase the pressure on monetary policy, financial advisers and investment planners have been urged to remain calm and to offer their clients the most responsible advice possible during the turbulent times facing the market.

Reserve Bank governor Tito Mboweni told the University of Stellenbosch Bureau for Economic Research (BER) conference in Johannesburg earlier this month that, “things might get worse before they get better. We should brace ourselves.” The average CPIX inflation expectations for this year increased from 5.9 percent at the time of the previous BER survey to 7.8 percent, and for next year from 5.6 percent to 7 percent.

Asked what advice he would be giving intermediaries and investors under current circumstances, chief investment officer at PPS Investments David Green stated that he was not convinced that all was necessarily doom and gloom. “It is still important to have nerves of steel though, as no one knows whether the market has bottomed out.”

His advice to intermediaries is to rather remain calm. “Don’t sell off your unfavourable assets now and stand the risk of losing out around the corner, when the market reaches its inevitable upside.” The best weapon in anyone’s arsenal – for both intermediary and investor –will always be a well constructed, properly diversified portfolio with a targeted return that matches specific needs. It is crucial that a proper, professional in-depth financial needs analysis be completed.

Green explained that clients and intermediaries should not forget that there are two “levers of control” which could be utilised when interest rates increase as well as saving and investment become difficult. While it might be tempting to skip fixed monthly payments in order to maintain a client’s present standard of living, he believes it is better to look at any possible lifestyle changes. Too often, people will change their portfolios instead of cutting back on elaborate and often unnecessary expenses, such as overseas holidays.

There is certainly no such thing as guaranteed success. But a properly constructed, broadly diversified portfolio, serviced by a partnership between a diligent intermediary and an experienced multi-manager will put the client on a path to regular returns with a lower amount of risk where his investment needs are met, even during these turbulent times.