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Coronavirus has ‘pushed’ people to financial advice

Coronavirus has ‘pushed’ people to financial advice

The coronavirus crisis and the knock-on effects of the global pandemic on markets have illuminated the value of advice to investors, research has shown.

Figures from Columbia Threadneedle show more than a third of investors reported the Covid-19 crisis had prompted them to value the benefits of financial advice more.

The fund house polled 263 investors in May and found some 17 per cent of investors regretted their previous reluctance to pay for professional advice and more than a fifth (21 per cent) wished they had a proper financial plan.

Alastair Caw, head of UK wholesale distribution at Columbia Threadneedle Investments, said: “Investors are clearly now placing more value on guidance and advice to make the right decisions, giving confidence in their long-term financial planning arrangements.”

It was not surprising investors could turn towards advice, as 57 per cent were concerned about the long-term impact of the crisis on their investments and 46 per cent were worried about their retirement income.

Tim Harvey, director at HR Independent, agreed with the findings. He said: “Overall, I think it will help the advice market.

“What inevitably happens is that those with an IFA will say to their peers that they are laid back, have been reassured about their financial plan and in general, will have a clearer understanding of their capacity for loss.”

Mr Harvey said IFA clients would be “the flag bearers” during the downturn for how a solid financial plan worked.

The research also showed investors believed they would think about their finances differently as a result of the coronavirus crisis.

A third of investors polled said they wanted to have a more diversified portfolio, 45 per cent thought they were more risk averse, while 54 per cent said they had identified new investment opportunities during the pandemic. 

Some 36 per cent of investors felt the crisis had made them more inclined to favour cash.

Mr Caw said: “The pandemic is causing investors to rethink their previous financial planning arrangements, recognising new investment opportunities alongside the benefits of diversification. They will need professional advice to do this well.”

He added it was “concerning” that investors were now more inclined to favour cash but noted it was “understandable” given recent market upheavals had put more focus on risks.

imogen.tew@ft.com

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