It is around seven months since the last full lockdown, but the UK is reportedly looking to carry out a two-week “circuit breaker”.
The first lockdown took a great toll on people’s mental and physical health, as well as businesses up and down the country.
But can financial advisers be more prepared for it this time around.
Portfolio Adviser sister title International Adviser spoke to the industry about differences from the first lockdown, finances and technology in surrounding the reported second lockdown.
Lessons learned from lockdown one
The first priority for advisers is to learn from the first lockdown several months ago.
Chris Page, director at Lewis Brownlee, said: “Don’t make assumptions. For us I have been very surprised in the take up of video calling, especially from our elderly clients. Had we adopted this way of working sooner I believe we would have been able to ‘check-in’ with clients on a more regular basis.”
David Barton, chief executive of IWP’s north west hub Prosper, said: “It’s very important to remain engaged with clients. Keeping them up to date with all the latest economic and market development through e-communications and hardcopy newsletters helps us do this.”
Tim Sargisson, chief executive of Sandringham Financial Partners, added: “The mental health and welfare of staff will require care. Attention and support from employers if this drags on indefinitely with no clear end in sight.”
Preparing for second lockdown
There may not be much to do differently, in terms of business organisation, for advisers, as most would have set up appropriately before.
Sargisson added: “Thankfully, the government seem to be doing everything to avoid a second full lockdown.
“However, having said that we haven’t made any significant changes in working practices since we went into full lockdown in March.
“While we reopened the office in August, we still operate flexible working and recognise we have a clear split between staff who want to work from home and those that prefer to be office based.”
Kay Ingram, public policy and communications director at LEBC Group, spoke about what providers need to do differently if a second lockdown takes place.
“What we would like to be different is for some providers to be more agile in their response,” Ingram said. “While some have adapted well and shown flexibility, accepting digital signatures for example, others have disappointed in their rigidity and slow response times.”
Financial adviser revenues down during coronavirus
One of the biggest problems of the Covid-19 crisis and lockdown has been the financial toll on business.
Some three quarters of advisers have seen gross revenues fall due to Covid-19, with a fifth forecasting a decline of at least 20% per cent, research has shown.
The 2020 Financial Advice Business Benchmarks from the Personal Finance Society and NextWealth found smaller firms, with only two-to-five employees, had been hit the hardest, with 83% reporting a drop in revenue.
So, what can firms do to keep going?
Lewis Brownlee’s Page said: “For me, it all comes down to cash-flow. We don’t know how long this thing is going to last so I think following Amazon’s value of frugality would be a good first step.”
Sargisson added: “There is no doubt that some firms have been hit hard. Looking at ways to improve efficiencies in your business is essential to deliver what is demanded and expected from us by clients and the regulator.
“The aim to achieve better customer engagement and improved customer outcomes.”
IWP’s Barton said: “Housekeeping around cost management has never been more important.
“We have identified significant savings across software licensing, various insurances, including indemnity insurance, and renegotiation on advertising costs.”
Can advice firms survive another hit?
It may be easy to suggest that firms can move finances around in a bid to survive.
But a look of firms streamlined dramatically by trimming the fat of their business. So, can advice companies survive another financial-hit from lockdown?
Sandrigham’s Sargisson said: “Those firms with weak balance sheets and a high proportion of fixed costs maybe tipped over the edge by this crisis.
“Those firms who fail to communicate with clients, who haven’t previously invested in robust technology will also struggle. In the end, it will be about a determined adherence to sound business fundamentals over recent years that will separate the winners from the losers.”
LEBC’s Ingram said: “Many smaller firms are finding it tough; increasing professional indemnity insurance and regulatory costs, largely beyond their control, do not help, but the key determinant for survival in a prolonged lockdown will be whether the firm has the technology to communicate with clients.”
How to bring in new clients while social distancing is in place
One of the biggest tasks for the financial advice industry is continuing to bring in new business.
But this is rather hard without a face-to-face business approach, unless you have turned to digital marketing.
Adam Benskin, chief executive at Strabens Hall, said: “The area that is affecting us is the fact that you can’t do face-to-face marketing.
“This time of year normally we would be doing business and meeting people but that isn’t happening, so what we’re doing as a business is developing a PR campaign because we can’t access our markets in the normal way.
“The other aspect is digital marketing. And I think some firms perhaps in the last lockdown believed that this was going to be a temporary issue, and are now realising that this is going to be possibly a much longer-term way of working and therefore business needs to adapt.
“I think digital marketing will have an important role to play in that.”
Barton said “We continue to push forward our profile within local community magazines as potential clients still retire and inherit in a pandemic or a lockdown. It is more important than ever that we maintain our presence and reinforce that its business as usual ‘ish’.”
But Ingram says that LEBC “enjoyed a high level of client referrals” throughout the pandemic, as “clients recognise that we have not let covid-19 get in the way of delivering a good service”.
‘Covid demands you embrace technology’
As much as it paramount to have a tight grip on finances at a time like this, it is as important for firms to have technology at the heart of their business.
Next Wealth’s report found that 58% of sole traders spend up to just £5,000 on tech.
Some 28% of firms with six-to-10 employees only spend between £25,000 and £50,000.
Over half say the lack of time to learn and implement new technology is the biggest barrier to changing tech provider, and 53% agree that a lack of tech integration is their biggest challenge.
Sargisson said: “The signs aren’t promising. Covid demands you embrace technology.
“However, technology and IFAs do not make good bedfellows across thousands of advice firms because there’s much more to it than ‘plug and play’ and simply flicking a switch.”
Barton added: “As an industry we may have been behind the curve on technology, but the good firms will have already embraced tech in their businesses.
“The shift we are seeing is with clients themselves being more comfortable with remote meetings and reviews rather than a new wave of technological development for a second lockdown.”
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