Financial advisers are needed more so than ever before, writes Guardian's head of strategic partnerships
As the UK slowly starts to emerge from total lockdown, it is clear that the post-coronavirus world is a very much altered world from the one we were living in just three months ago. It is a health and economic crisis unlike anything we've ever experienced.
While on one hand, glimpses of normal life are beginning to look within reach, with more people on the streets, schools set to welcome some year groups from next week, and non-essential shops allowed to open from 15 June. Yet on the other hand, so much has changed. Social distancing is here to stay and businesses are having to re-engineer and adapt to accommodate the new guidelines.
And even when these things do start to open up, the government will be looking closely at the reproduction number (R) of the virus and has said that we may see local areas go into lockdown again if case numbers increase.
Advisers should take comfort in the fact that what they provide is needed now more than ever.
Against this backdrop, it's incredibly hard to predict what the next few months will look like for anyone; our businesses, our clients, or ourselves. Pretty much every person's family or livelihood has been altered in some way.
Some industries and companies have closed down completely. Millions have been furloughed, some people have taken pay cuts, while many others face, or have suffered, redundancy. The self-employed have been offered support, which will start to come through in June, although many will have had to turn to benefits in the meantime.
Within financial services, the picture is perhaps slightly more positive. Businesses in our industry are among the least likely to have accessed the government's furlough scheme, according to a recent report by the Resolution Foundation1. However, while financial advisers may be better positioned than some other sectors to cope with the impact of lockdown and ongoing social distancing requirements, it is still clear that the world of financial advice has changed dramatically.
Wealth management businesses have had to cope with falling markets. This will have impacted recurring incomes. Many clients, for the reasons I've touched on above, face unexpected personal economic challenges and may want to reduce or stop contributions, or to access their investments.
Advice businesses operating in the mortgage market will be aware that without a buoyant home mover market, mortgage sales have dropped dramatically. Most high loan-to-value mortgages have been withdrawn. We do hear of some sales going through from confident buyers, but overall, the re-mortgage market is looking like an increasingly important source of business.
On top of that, social distancing will have had an impact on adviser operations and will continue to do so. No matter which segment of the market they're focused on, all adviser firms will have had to adapt rapidly to more remote working and different ways of interacting with clients. For some, that will have been easy; for others, it may have proved harder to adjust. And, over time, while more of the restrictions may be marginally eased, we do not expect to return to ‘business as usual' anytime soon.
In my own discussions with advisers they're saying that, despite these serious challenges, most are finding ways to adapt. As you'd expect, they're focusing on their income streams and, most important of all, their clients.
Clients are starting to proactively talk about life insurance
In fact, their clients need them more than ever. We know that in the face of uncertainty, many people will be looking to save money. For those who have lost their job or income, reducing monthly outgoings will be a necessity. Across the financial services industry, we've seen some providers take steps towards helping those struggling make monthly savings.
But we also need to make sure people aren't cutting the things that provide them with peace of mind in the first place. Given the nature of coronavirus, people are becoming more aware of their own mortality and exposure to risk. We know from conversations with our distribution partners that many clients are starting to proactively talk with them about life insurance and other forms of protection.
These clients need good advice now more than ever
These are hugely uncertain times, and clients will be looking for more certainty. They can get this with good advice. We feel so strongly about the role advisers can, and should, play during this time, that we've been running a series of webinars designed to help our partners think about how to best serve their clients, proactively, through this unprecedented time of change.
For homeowners at the end of a mortgage deal, interest rates are at an all-time low. With good mortgage and protection advice, these people could end up being both better protected and better off each month. For existing protection clients, they should probably be reviewing their current policies. Are they still satisfied with their levels of cover? Have their needs changed?
Also, has the attitude to protection changed among some of the more ‘investment-oriented' clients? When families are worried about how their loved ones would cope if the worst happened, we find they are more likely to engage in some of the important details driven by that sense of ‘what if'. So, it becomes easier to explain the differences between the varying covers on offer; for instance, why you'd choose dual life over joint life; as well as the breadth of coverage offered by different providers.
Of course, as an industry, we all need to think about getting the language right - it's not about sales, it's about responding appropriately and proactively to clients' evolving needs and preferences - and collectively, we have the skills and responsibility to get the tone right.
This is a moment in history like no other. It's also a moment that highlights the value of advice. Advisers should take comfort in the fact that what they provide is needed now more than ever.
Mike Devaney is head of strategic partnerships for Guardian Financial Services
- Launching an economic lifeboat, The impact of the Coronavirus Job Retention Scheme, Resolution Foundation, 20 April 2020.
'These products sell themselves once they are explained the right way'
HSBC Life study reveals
'What about commission?'
How it is done and why it is so important