This latest newsletter comes to you as we approach the end of our sixth week in lock-down.

It has been a remarkable and challenging few weeks in lots of ways.

Prime Minister Boris Johnson knows this more than most – having experienced the extreme low of being an intensive care patient struck down by this deadly virus to returning to Downing Street and celebrating the birth of a new baby son.

In some ways, the markets have been almost as resilient as Mr Johnson.

The markets initially dropped by over 30% but have since bounced back, while, in contrast, overall portfolios from February until now have seen an average drop of 12%.

While not underplaying the turbulence of recent weeks, conversations with almost all clients have concentrated on providing reassurance that their longer term, diversified plans will be more than capable of withstanding the impact of Coronavirus.

This is likely to include further financial shocks over the next couple of years, particularly if, as has been widely mooted, the UK experiences further waves of the disease as we slowly start to move to a new normal.

As businesses start to emerge from this crisis, many, such as those in the commercial property sector, are likely to have to deal with even bigger holes on their balance sheets than they imagined. Some, including the big food retailers and pharma giants, will be among a smaller section of the economy to buck the trend.

Our job as your financial adviser is not to try and call the markets and recommend short-term tactical opportunities. Instead, we focus on partnering with our clients to provide a carefully mapped out and personalised plan over the right timescale.

The pandemic highlights, more than ever, the importance of having a broad, diversified range of investments which will deliver as part of a long-term financial plan.

With clients ranging in age from their 30s through to 80s, no two plans are the same.

Good plans are about anticipating that there will almost certainly be bumps in the road.

In the case of this current crisis, I have been advising a client who has been made redundant a few years ahead of when he was planning to retire. While not ideal, his long-term plan is, however, able to absorb this set-back.

We have made a point of calling round clients since the Coronavirus crisis first took hold and it has been heartening to receive so much feedback that people are confident – in a time of so much uncertainty – that their financial planning is in good hands.

While we are always pleased to hear that you are happy with what we are doing on your behalf, it is very much a partnership – working together to help you meet or exceed your financial goals.

We want to hear from you

Like so many businesses, we had to quickly adapt our way of working almost overnight.

Thankfully, we have always been a business that embraces technology and I have been delighted with how well the team has adjusted to our new remote working ways.

Remote does not, however, mean that we don’t want to hear from our clients. While we cannot currently carry out face-to-face meetings in our Neston office, we are still busy speaking to clients by phone or on the myriad of online conferencing facilities that have so quickly become part of our everyday language.

Earlier this week, we even onboarded a new client using Zoom, running through all the necessary paperwork by sharing my screen. It was almost as if we were sitting opposite each other in our meeting room.

Like other businesses, we have been busy implementing the Covid-19 working arrangements.

This has meant decamping to our kitchens, dining rooms and bedrooms to set up temporary home offices.

The team all tell me they are working harder than ever, and, in all seriousness, we are committed to providing a level of service, support and delivery as good as or better than before the virus hit.

All calls from 0151 353 1066 are diverted to Stephanie. The only drawback is we only have one Stephanie so occasionally calls may not be answered as quickly as before. If you want a quick call back from any of the team then email mail@pbatesfs.co.uk .

You can also get direct to the team on the following email addresses:

• Alan Mellor am@pbatesfs.co.uk
• Helen Brown hb@pbatesfs.co.uk
• Stephanie Jerome sj@pbatesfs.co.uk
• Lynn Groves lg@pbatesfs.co.uk
• Margo Dorozik md@pbatesfs.co.uk
• Emma Bowen eb@pbatesfs.co.uk

All post is being picked up most days, but we would strongly suggest email will get a quicker response.

Some clients have suggested that they won’t call because we must be busy, but please call even if it doesn’t feel vital, we do love the interaction and want to answer any concerns and provide support at this important time.

And when this is all done there is going to be a party!

History doesn’t repeat itself, but it often rhymes. We all remember Tony Blair saying this is not a time for soundbites and then launching into a soundbite. Can I apologise if I fail also to follow his advice?

History doesn’t repeat itself, but it often rhymes. We must understand what has happened before to inform our perception of what happens next and what decisions should be made to protect and enhance our financial plans.

The major financial events of the last century are chronicled on the wall of both our meeting rooms and I know many of you will have discussed how historical events have impacted investment returns.

It is useful to understand how markets work, while remembering all portfolios also have diversification into fixed interest, real assets and cash.

Stock markets are called markets because they are effectively a trading place for people to buy and sell their share of a company’s value. The price is established at the point where buyers and sellers are both content to trade. If there are more buyers than sellers then the price goes up to a point where an equilibrium is reached. Recently there have been more sellers than buyers and hence values go down.

It is understandable when there is worry and uncertainty buyers are scarce and hence falls in value continue until buyers see value, enough for them to trade. When worry reduces, buyers see value ahead and the price moves upwards to meet increased demand for shares.

For those who like analysis and charts there is a graph below which shows the market falls of the last 30 years and the recovery period. This shows the longest period for recovery is 30 months and averages are much lower. Now, I am not ready for predictions but the systemic damage through a clogging up of trade through the pandemic feels less permanent than the loss of confidence in the value of assets during the financial crisis of 2008.

The outcome is certain though to be a huge increase in Government debt in most economies, so get ready for tax rises when this is all over.

Most important is having income or cash to spend while any recovery happens. This is a massive part of having a robust financial plan and why these falls should not be a worry with a sensible long term plan. Missing out on the recovery when it happens is perhaps more damaging to clients.

We have compared our middle of the road investment approach to the FTSE All share to show how diversification helps dampen losses. This is not a fair comparison but is intended to demonstrate the benefits of not having all eggs in one basket.

We remain available to talk through these principles to clients as well as their friends and family if we can help understand the implications of today’s financial events.

So how long does it take?

Vanguard has produced the following chart which shows Bull and Bear market figures for the last 30 years.

The continuing spread of Coronavirus in the UK and elsewhere has inevitably caused turbulence on the global markets.

Last week, the major stock markets saw their worst performance since the 2008 financial crisis.

The Organisation for Economic Cooperation and Development (OECD) is predicting that the global economy could grow at its lowest rate for over 10 years.

It is now forecasting growth of 2.4% in 2020, down from 2.9%, but is forecasting that this could fall further to 1.5% if there is a more “intensive” outbreak of the virus.

The Bank of England and other banking institutions around the world are on standby to take emergency action if required.

Any long-term investor is advised to avoid some of the doomsday scenario headlines you might see in the media.

If you are invested for long enough, history tells us returns are the reward for taking risk.

Inevitably, some people will sniff an opportunity as stocks fall, but it is never a sensible strategy given how difficult it is to pick both the top and bottom of a market.

Such an approach can never be anything other than speculation – something we do not practise at Phillip Bates & Co Financial Services.

Part of our responsibility to our clients is to ensure they have the necessary information to understand why we make the recommendations that we do.

The markets need buyers and sellers and there are currently more sellers, but this position will turn again. This is what creates the equilibrium that the markets require.

If your objectives are short-term, you should not be in the markets. They are very much for the longer-term investor seeking a well-balanced, diversified portfolio.

A balanced investor, such as one with a risk profile of 6 (RP6), will have experienced an uplift of 5.5% during the last 12 months – including the last two weeks of turbulence on the markets caused by the outbreak and spread of Coronavirus. Someone with such a risk profile will typically have 55% of their portfolio in equities and 45% elsewhere.

Sometimes, it is easy to be influenced by the shock headlines you see on TV in a given week when what an investor really needs to look at is what happens over a longer timeframe.

The job of an experienced Chartered Financial Planner is not to be stock pickers. This is far too short-term. As the name suggests, our role is to plan for our clients, plotting their income needs for the future.We will continue to carefully track the spread of Coronavirus and its impact on our clients’ portfolios, keeping you fully informed of any developments. As ever, please also feel free to contact our team if you have any questions or concerns.