Client Survey: A more uncertain world, and a more cautious investor

In recent weeks, events in the Middle East have added fresh pressure to global markets, with the conflict involving Iran and the disruption affecting the Strait of Hormuz bringing renewed concerns about oil prices, inflation and wider market volatility.

Against that backdrop, our latest client survey offers a timely snapshot of how clients are feeling and, in particular, how international instability is feeding into confidence about their own financial future.

When we asked a group of clients whether they feel more or less confident about their financial future compared with last quarter, 53% said their confidence has stayed the same, 43% said they feel less confident and just 4% said they feel more confident.

That is a clear shift from the previous survey, when 66% said their confidence had stayed the same and 17% said they felt less confident.

The reasons given in the survey were strikingly consistent, with references to conflict in the Middle East, concerns about oil prices and unease about the wider global outlook appearing throughout the comments. Many of our clients are clearly linking events overseas with their own financial position, which is entirely understandable given the speed with which geopolitical shocks can now feed through into markets.

That concern sits alongside realism about how markets behave, with several clients saying that markets rise and fall and that volatility has to be managed rather than feared, while others said they’re staying focused on the long term even in unsettled conditions.

We also asked whether shifting international priorities, particularly around defence and energy, are affecting how much weight clients place on environmental, social and governance (ESG) considerations in investment decisions, and here the results point to a cautious and pragmatic mood rather than a dramatic change of direction.

A majority of respondents, 55%, said they’re neutral on whether ESG will play a greater or lesser role in shaping their investment choices, while more respondents said they’re less likely to prioritise ESG, at 16%, than more likely, at 9%.

The comments help explain why, with some clients pointing to the importance of energy security, others referring to the continuing relevance of traditional energy sources, and some suggesting that defence-related investment may now deserve greater attention than it once did.

That doesn’t suggest a wholesale rejection of ESG, but it does indicate that, in a more unstable world, many clients are weighing those considerations alongside security, resilience and return, rather than treating them in isolation.

When we asked whether clients believe the current period of volatility is temporary, 28% said they are confident that it is, 31% said they’re not confident, and 35% said they’re unsure.

There isn’t a settled view here, and that in itself is revealing, because it suggests clients are not assuming the worst but nor are they brushing off recent events as a passing wobble that can simply be ignored.

We also asked about domestic policy, including changes to ISA allowances, and while 55% said those changes won’t materially alter how they save and invest, 45% either said they will, said they don’t know yet, or gave another answer, which suggests that a substantial minority are now considering whether they need to think differently about how they structure their savings and investments.

The overall picture is one of cautious resilience, with many respondents clearly alert to the risks created by conflict, energy disruption and political uncertainty, but still relying on long-term planning to guide their decisions rather than reacting impulsively to every development.

Karl Pemberton, managing director, said: “It’s entirely understandable that events in the world are weighing on how people feel about their finances, particularly when markets can react quickly to geopolitical developments. What’s important is to keep that in perspective and remain focused on long-term plans. Periods of uncertainty are not unusual, and markets have a history of adjusting over time. It has certainly felt that we have had more than our fair share of ‘unexpected moments’ in recent years than we would have liked, yet markets have continued to grow exponentially despite the shocks.

If you are concerned about how current events may affect your position, it’s always sensible to speak to your adviser and make sure your plans remain aligned with your goals.”