Our Views

What worries you most about a change in government?

The appointment of Boris Johnson as the new Conservative party leader brings uncertainty and concern about a possible change in government.

Political uncertainty can cause investors to lose confidence in domestic equity markets. This latest bout of political change coincides with more considerable uncertainty around Brexit, with Prime Minister Johnson plotting a course towards a no-deal exit from the European Union at the end of October.

Parliament remains divided over Brexit options, raising the risk of political
deadlock and upheaval in the months ahead; actions that could result in a fresh general election, designed to boost the currently wafer-thin Tory majority, or at least obtain a more explicit mandate from the electorate.

Financial advisers are feeling this uncertainty, with our clients increasingly asking questions about what a change in government could mean for their money.

A new poll by insurer Royal London has found that 90% of pension advisers have reported an approach from worried clients during the past two years, asking questions about what a potential change in government could mean for their finances.

The survey also found that similar numbers of advisers have raised the issue with clients.

54% of advisers reported either a greatly or slightly increased frequency of these questions being asked since the start of the year.

The biggest concerns center around inheritance tax, changes to pension tax relief, and potential changes to income tax. More than a quarter of advisers said their clients raised these concerns often, with 10% saying the topic comes up “all the time”.

Looking through the survey results, it was positive to see most advisers are recommending a ‘wait and see’ approach to the questions. Advisers responded by saying “take a long term view”, “wait until change has happened”, “base your financial plans on current legislation”, “don’t panic”, “diversify”, and “review your tax allowance”.

These are all sensible responses to an uncertain outlook.

“Politicians are using big financial topics such as inheritance and pensions tax relief as policy footballs, so worried investors are wise to seek views from their advisers on whether this will affect their plans. With so much political uncertainty, the difficulty for advisers is knowing what to say. For the moment, ‘Keep calm and carry on’, is the most common line of defence.”

Becky O’Connor, personal finance specialist for Royal London

If you’re concerned about the current spell of political uncertainty, do talk to us about the best approach with your money.

Jon DoyleWhat worries you most about a change in government?