Global lockdowns due to the coronavirus have triggered a profound need to make changes. That could mean working more from home, changing career, retiring or taking a well-earned career break.
These epiphanies may be behind the recent rise in people seeking financial advice.
Research by Canada Life found that 43% of financial advisers believe the pandemic has made clients more demanding of their time, especially the ones in drawdown.
Unfortunately, there might not be enough professionals to meet that demand – as advisers, too, have been reassessing their futures.
A study by research firm Core Data revealed that nearly one in five (19%) advisers believe the crisis will result in an exodus worse than the one brought about by the introduction of the Retail Distribution Review (RDR) in 2013.
‘A perfect storm for those in drawdown’
Andrew Tully, technical director at Canada Life, said: “It’s clear that the short and long-term impacts of Covid-19 are only now starting to be felt and understood.
“In recent months, we have seen stock market volatility around the world, with falls of up to 35% followed by a substantial rally shortly after, and the slashing of dividend payments by many businesses.
“This could easily be seen as a perfect storm for those in drawdown and it’s unsurprising that many may be feeling concerned.
“Advisers may also be starting to consider how to factor in any lasting changes of today’s ‘new normal’. We will never know what the future holds; however, by helping people make decisions for the right reasons, you can help your clients enjoy tomorrow.”
Steering over-55s towards guidance
But it might be easier said than done.
The Money and Pension Service’s (Maps) latest report showed that even strongly encouraging people to save is not enough to create and bring the transformational shift needed to support savers adequately.
“Nearly a million people are set to hit 55 this year alone and gain access to their pension savings,” said Stephen Lowe, group communications director at Just Group.
“The Financial Conduct Authority needs to be more ambitious about implementing measures that deliver a meaningful change. A guidance session must become a routine step for those accessing pension cash, with only a small minority opting out.
“The FCA was handed the job of strengthening the guidance framework when legislation was passed in 2018. At the moment, it is easier to opt out of guidance than to opt in. The new process should lead people towards guidance so those opting out must make an ‘active’ rather than a ‘passive’ decision.
“Critics will say this stops people getting at their money so quickly, but our view is that, after perhaps 40 years of saving, 40 minutes of guidance is time well spent, if it stops people making decisions they later regret.
“We cannot afford to move too cautiously in increasing the take-up of impartial guidance given the huge numbers of people becoming eligible to access their pension benefits,” he added.
Are there enough advisers to meet demand?
And this brings us to the collision of wants and needs.
Clients want more of their advisers’ time, the government believes the public needs more guidance, but a significant number of financial advisers don’t seem to want to continue working in the sector.
How can people be channeled towards or seek advice, if there are not enough advisers?
This is potentially where the younger generation might step in.
According to chancellor Rishi Sunak’s Summer Statement, organisations have been incentivised to both retain and create jobs to mitigate the overall impact of coronavirus on the economy and the employment market.
“We cannot lose this generation, so today I am announcing a kickstart scheme […] to give people the best possible chance of getting on and getting a job,” Sunak said while presenting the government’s initiatives.
“I urge every employer, big or small, national or local, to hire as many ‘kickstarters’ as possible.”
The financial advice sector might just need to turn to the £1.6bn scheme to help it evolve and keep up with the demands of the post-coronavirus world.
