Everyone needs financial advice at some point in their lives to help make those ‘big’ financial decisions: retirement, estate planning or investing for your children. But how are you going to get this financial advice? By talking to your friends and family or by seeking professional advice through an independent financial adviser (IFA) or chartered financial planner (CFP).
It could be argued, financial advice is needed more than ever due to the current global Covid-19 crisis, but people might just not have the budget to pay someone professionally.
A recent Facebook poll (conducted on Philip Calvert’s LifeTalk – Mastermind Group for IFAs and CFPs) showed that there had been a fall of between 51%-75% in the number of new business enquiries over the past month (March-April 2020).
Even though this fall seems dramatic, it could be due to temporary factors like people not having the funds to invest in professional financial advice; people preferring face-t0-face meetings rather than virtual meetings or just simply finding an IFA or CFP is not on their list at the moment.
Scott Gallacher, CFP at Rowley Turton says: “If there is a quick resolution to the Covid-19 situation, i.e. successful suppression of the virus and an effective vaccine introduced sooner rather than later, then I’d expect little significant long-term impact on the financial advice market. Perhaps the key changes would be a realisation of the value of having an emergency fund in cash, and the greater acceptance of remote working and video conferencing helping improve efficiency.
“However, without a quick resolution to the current situation, then the impact on the financial advice market could be significant. If the fall in new business enquiries continues then combined with the other financial pressures on advisers such as rising PII premiums, I’d expect we would see many advisers having to exit the market.”
Gallacher adds: “The lockdown of large numbers of businesses within the UK is not sustainable for long without causing real damage to the UK economy. This damage would be expected to have a knock-on effect on financial advisers as our clients and potential clients would have less money to invest or pay premiums. Client’s might be also be concerned about the advice fees they are paying.
“With a longer-term crisis then remote working and video conference I mentioned earlier would have to replace face-to-face meetings and whilst this may help reduce costs for advisers, I’m not sure this will offset the wider negatives. That said, as we already have a shortage of financial advisers in the UK those firms that can manage to weather the current storm might be expected to benefit in the long-term. This is because they would be expected to ‘pick up’ new clients displaced as a result of other advisers and firms leaving the market. To be successful I think advisers will need to be clever, efficient and, above all, brave.”