Staying invested in markets regardless of what negative news stories maybe circulating is the “most important principle”.
This is what BlackRock head of UK adviser sales Heather Christie told Money Marketing. She added that financial advisers play a huge part in this as they have “seen it all before”.
Most advisers have lived through the dot-com bubble, the financial crisis of 2008 and the economic fallout following the September 11th 2001 terrorist attacks on the twin towers in the US.
Advisers know the best days follow the worst, Christie said.
She gave the example that if someone invested £100,000 in the S&P 500 over the last 20-years, that number would increase to £600,000.
However, if an investor reacted to negative news and pulled money out it would seriously affect their return on investment.
As if the investor missed the best top five performing days of the S&P 500 their ROI would reduce to £400,000.
Advisers have implemented a long-term plan for clients and they know some tough days will take place.
“Tough days are always included in plans.”
Advisers play such a pivotal role in staying invested especially due to loss aversion, a cognitive bias where the psychological impact of losing something is greater than the joy of gaining something of equal value.
Christie compared advisers to Odysseus in Homer’s epic, the Odyssey. There is a chapter within the Odyssey in which Odysseus plug his and his crew’s ears with beeswax and ties himself to the mast of his ship whilst sailing past the Sirens, who are alluring, monstrous creatures who use their enchanting voices to lure sailors to their deaths on their island.
Christie said advisers are like the beeswax “they stop you from hurting yourself” by reacting to news and pulling your money out of an investment.
In 2024, LV= announced it had completed its asset management services transition to global investment management firm BlackRock.
LV= said the transition is part of a wider business strategy to broaden its distribution and investment capability.
It added that it “aligns with its ambition to deliver enhanced value for members”.
BlackRock has taken responsibility for the tactical asset allocation and active portfolio management of LV= Smoothed Managed Funds (SMF).
