"While we are in a very different economic position to before the crisis, there remain opportunities to come out on top."
Many have not only needed to access forbearance, such as mortgage payment holidays, but their credit scores and investment performance could have been worsened, leaving them in a significantly different financial position that before the crisis began.
That is where advisers can play a key role in helping many to piece together their financial situation and put in place provisions that can help them futureproof their security as we emerge from the peak of the disruption. Whether it is helping people to reallocate their savings and investments, manage debts, reduce household costs like mortgage repayments or even to access specialist borrowing services, advisers can help provide a solution.
Understanding the client
The first point here is that the nature of client’s circumstances is now likely to be extremely varied. Some will have been fortunate enough to remain secure in their job for the entirety of the crisis, meaning they potentially have additional cash reserves that they want to use. Others, such as the many self-employed business owners that were until recently missed by Government fiscal support, may have seen their firms put in a more vulnerable position. In this sense, it’s important to understand the full picture and delve deeper into why a client may wish to opt for a particular financial product and strategy. This should, of course, all fall within the important due diligence around assessing vulnerability. The FCA recently published its updated guidance on identifying vulnerable clients and advisers should be clear on what to look for, and how to broach these potentially sensitive conversations.
Helping make improvements to clients financial circumstances
Financial advisers act as a safety net for people to discuss their financial options and learn about the solutions that will best fit their individual circumstances. No matter their aims, advisers should be the starting place for guidance, providing people with reassurance and a tailormade plan.
It sounds straightforward, but the first thing advisers can bring is wider market knowledge. People leading busy lives have significantly less time available to explore the financial options available to them, and the nuances of each. Therefore, a key value add for advisers is to explore the options which clients are not yet aware of i.e., ways to reduce tax bills, future proof their savings, or even access funds through their existing assets via tool like equity release mortgages. Given the brutal realities of the crisis, considerations such as protection are also vital. A client that, for instance, is worried about the financial security of their dependents may want to consider how a lifetime insurance or critical illness policy could offer a safety net to their loved ones, after death.
Advisers also need to consider how their client’s age and financial position could lead them to need different types of support. For younger people, their key financial goal may be to mitigate any additional financial disruption from the crisis to help them continue accumulating wealth, so that they can achieve life goals like buying a home. Others, such as those approaching retirement may need a very different financial strategy – one that, given the impact of the crisis, helps them to get value from their pension savings and allows them to continue growing their money even after they stop working.
Advisers more than ever have the opportunity to make a meaningful difference to their clients' lives and help them to make the informed decisions and, while we are in a very different economic position to before the crisis, there remain opportunities to come out on top. After a year of successive lockdowns, people’s priorities are likely to have shifted to reflect the impact of the crisis on their personal finance and advisers should offer safe hands in which clients can find support and guidance to overcome potential challenges. Clients are likely to be more responsive to advisers who combine the ability to listen well and show empathy along with their expertise can bring valuable help to their client’s financial wellbeing.
