Adviser-to-client template: Focusing on what’s important

For financial advisers to use with clients.

This document is intended to support your service proposition to clients. It is produced by our investment writers with a deliberately light tone and structure. However, these are guidance paragraphs only. It is not guaranteed to meet the expectations of regulators or your internal compliance requirements. If you wish to remove or amend any wording, you are free to do so. However, please bear in mind that you are ultimately responsible for the accuracy and relevance of your communications to clients.

Dear Client, 

Following a challenging period in March, global sharemarkets rebounded strongly through April, with that positive momentum continuing into May. Indeed, and this may surprise you; the S&P 500 is now meaningfully higher than it was immediately prior to the start of the Iran conflict. I mention this because the natural behavioural response to significant and uncertain geopolitical events such as this, is to sell up, move to cash, and to only return to markets once it feels “safe” to do so.

While this reaction is understandable, it can be detrimental to long-term outcomes. Human behaviour is inherently geared toward short-term feedback and the avoidance of loss, which can lead to emotionally driven decisions during periods of volatility. Investing, however, requires a different mindset — one that prioritises patience, discipline, and the ability to stay focused on long-term objectives despite short-term uncertainty.

As the old adage goes, the only certainty is uncertainty! And so how do we navigate what feels to be an increasingly uncertain political and economic environment – well, by using the same investment principles that have stood the test of time:

• Remaining anchored to a well-defined investment strategy is critical, as it allows you to take advantage of opportunities when markets overreact. In this regard, Morningstar’s valuation-driven asset allocation approach continues to focus on identifying gaps between market prices and the underlying true value of assets, i.e. they continue to look for assets that are “on sale”.
• Diversification – in its simplest form, this is “not having all of your eggs in one basket”. Diversification is commonly referred to as an “investor’s best friend” because it helps to build portfolios that remain resilient across different market environments.

Markets will do whatever they will do, particularly over shorter time periods which are often heavily influenced by investor emotion. What we can control, however, is how we behave, and so I trust that the knowledge of having your portfolio managed via a robust, consistent an repeatable investment approach brings you peace of mind, now, and into the future.

Signoff 

Since its original publication, this piece may have been edited to reflect the regulatory requirements of regions outside of the country it was originally published in. This document is issued by Morningstar Investment Management Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Morningstar’). Morningstar is the Responsible Entity and issuer of interests in the Morningstar investment funds referred to in this report. © Copyright of this document is owned by Morningstar and any related bodies corporate that are involved in the document’s creation. As such the document, or any part of it, should not be copied, reproduced, scanned or embodied in any other document or distributed to another party without the prior written consent of Morningstar. The information provided is for general use only. In compiling this document, Morningstar has relied on information and data supplied by third parties including information providers (such as Standard and Poor’s, MSCI, Barclays, FTSE). Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third parties accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment or the return of capital. Morningstar warns that (a) Morningstar has not considered any individual person’s objectives, financial situation or particular needs, and (b) individuals should seek advice and consider whether the advice is appropriate in light of their goals, objectives and current situation. Refer to our Financial Services Guide (FSG) for more information at morningstarinvestments.com.au/fsg.  Before making any decision about whether to invest in a financial product, individuals should obtain and consider the disclosure document. For a copy of the relevant disclosure document, please contact our Adviser Solutions Team on 02 9276 4550.