In Focus: Vulnerability  

Clients need guidance through uncertainty

Clients need guidance through uncertainty
 Photo by Andrea Piacquadio from Pexels

Financial advisers have played a crucial role in helping their investing clients get through 2020 - but this will need to continue into 2021, IFAs have said. 

While clients may still feel vulnerable over Brexit and the ongoing Covid-19 lockdowns, advisers said they are poised to provide the necessary reassurance in 2021. 

Philip Milton, principal of PJ Milton, said the twin threats of a no-deal Brexit and dealing with a pandemic for which there is no vaccine have now been allayed, so investors should take heart.

Writing to his clients, he said: "So, we have a Brexit deal! That’s good – it would never be perfect nor please all but what it does is replace uncertainty with certainty. 

"We have an encouraging escalation in the vaccine roll-out with hopes of all vulnerable and over-50-year-olds being treated by the end of spring."

He commented: "It’s still not going to be an easy time and precautions remain imperative especially if we are aged or vulnerable (or in touch with those who may be) and it is still tragedy for those who have lost loved ones".

Building client-adviser trust is essential to providing financial advice and enabling confidence among consumers who may feel vulnerable at this time.

Peter Blackburn, chartered financial planner for Stover Financial Planning, tweeted: "There are not enough characters [allowed in a Tweet] to articulate all the reassurance and care that advisers can provide.

"You won't find that in the Conduct of Business Sourcebook. Above all, the establishment of trust is essential."

However, Mr Milton added that investors should feel more confident that, with the uncertainty over, the "UK market now has a chance to move forward".

But even if the stock market continues to strengthen, there are other possible areas of uncertainty, which Steven Cameron, pensions director at Aegon, has urged advisers to consider.

These areas include the launch of the investment pathways in February, which may help the do-it-yourself investors to avoid some unwise and knee-jerk investment choices, but could not replace personalised, professional advice. 

There is also the risk of clients who are in cash-based savings accounts being penalised should interest rates turn to negative territory.

According to Mr Cameron: "Throughout the pandemic, the Bank of England base rate has remained at a record low of 0.1 per cent and in 2021 it could even go into negative territory.

"This sets a very real prospect that savers may be asked to pay banks for holding their money. If we do see such a radical change, people will need support and advice to make sensible savings and investment decisions."

Again, guiding clients through the uncertainty will be a huge part of the adviser's role in 2021, particularly for those who may be particularly vulnerable at this time.

simoney.kyriakou@ft.com