Following the Brexit vote, the majority of Brits made no investment changes. However, those who sought advice, particularly 18-24 year olds, saw an increase in portfolio value.
For many people across the UK, June’s EU referendum result was a bit of a shock. Initially, there were tremors in the financial markets due to the uncertainty as to where the country would head, and the pound plummeted to lows not seen in decades.
However, that initial fear of the unknown now seems to have subdued somewhat. But whilst we know a hard Brexit is on the cards, we don’t know exactly what that means. Despite this, people living in the UK are reluctant to move their money, 89% made no changes to their investments post-Brexit. In fact, a study we commissioned revealed that only 5% decided to move some or all of their money following the referendum.
The UK economy is already shifting as a result of the referendum result, the FTSE100 has hit all-time highs, whilst the pound has weakened, two facts closely related with one another. With Article 50 on the horizon, a new US President, and elections across Europe, this shift is set to continue. Is this rapid pace of change the reason that more than three-quarters of Brits with investments did not seek any form of financial advice following the UK’s decision to leave the EU? A decision most prevalent among over 65s (83%).
Younger generations, however, were not so hesitant to seek advice or vote for change, revealing confidence in their investment decisions in the face of economic uncertainty. Among those aged 18-24, we found that a second opinion was much more valued and in turn paid off. Those in this age bracket sought more advice than any other age group and in return saw a 20% increase in portfolio value.
During the tricky period following Brexit, the younger generation were eight times more likely to seek advice from the new breed of Robo-advisors than those over the age of 50. Of the 18-24 age group, 40% turned to their family and friends for advice, 18% turned to the media and 8% sought financial advice from robo advisors. The data suggests that by being proactive during times of uncertainty you could actually be increasing your portfolio value.
It’s reassuring to see that after an unprecedented event like the Leave vote, and the huge economic shifts that followed, the younger generation turned their minds to their personal finances and were willing to seek advice to ensure they made educated decisions.
But the events following Brexit are far from over. In the next two years the triggering of Article 50 and the negotiations and new legislation that will follow are likely to have an impact on the financial markets which is why it is crucial all savers remain engaged and focused.
With investment, it is all about planning for the future, that means ensuring you have an investment strategy built to weather potential storms. Here at Moneyfarm, we saw our net inflows in UK increase after the referendum, up 172% in July compared to June. This was a big jump from the month prior to Brexit, when June inflows were up 49% on May.