Advisers estimate about one in eight clients have suffered financial damage during the Covid-19 pandemic, according to research from The Openwork Partnership.
Its survey of 100 financial advisers in January found. on average. advisers believe 12 per cent of their clients have taken a financial hit during the pandemic, while about 8 per cent said none of their clients have been impacted.
About half of advisers said they had clients who have stopped saving or investing during the pandemic, while 32 per cent had clients who have run down savings.
Mike Morrow, chief commercial officer at The Openwork Partnership, said: “It's been a tough year financially for millions of people despite unprecedented levels of government help and advisers are seeing the impact on the ground.
“Of course, many people have benefited financially during the crisis with more money going into savings but one in eight clients on average suffering losses is bad news and particularly so when people are taking money out of long-term investments to keep going in the short-term.
“The value of financial advice and financial advisers will be very important as the UK starts to recover from the financial impact of the crisis, demonstrating how vital advice is and the role it plays in what are very personal situations.”
Around 19 per cent of advisers said they had clients who took money out of their pensions to keep them afloat during the pandemic, with 31 per cent of advisers saying they had clients who took tax-free lump sums out of their pensions earlier than planned.
HMRC data shows around 1.4m withdrawals were made in the year March 2020 to March 2021, with £9.6bn in flexible payments made.
But it's not just pensions. The Openwork research showed 27 per cent of advisers said clients have sold investments while 5 per cent said they have sold buy-to-lets and 4 per cent said they have downsized to smaller homes.
Martin Bamford, head of client education at Informed Choice, said it has been a pandemic of two halves for a lot of people, with some increasing their savings while others suffered job losses or salary cuts.
He thought some people also panicked in the early days of the pandemic and withdrew their money from the markets.
He said: "A big part of what we do as advisers is manage the behaviour of investing, and thinking back to last March, I hope that one of our value-adds as advisers was to help our clients see past all that noise and fear and stick with it for the long term as those who have stayed invested in the past year have been handsomely rewarded for it.
"The value advisers add is helping clients detach the emotions from their decisions and helping them invest with their heads rather than their hearts and avoiding the really silly decisions people make that will lose them money."
Last June research found that advised clients were more likely to feel they have a “fair opportunity” to profit from investing than consumers without an adviser.
Data from the CFA Institute showed while 57 per cent of retail investors without an adviser said they had a fair opportunity when it came to putting their cash in capital markets, some 81 per cent of advised clients felt the same.
What's more, some 57 per cent of those with an adviser trusted the financial services industry while just a third (33 per cent) of retail investors without an adviser thought the sector was trustworthy.
Alistair Fullerton, director at Lathe and Co, at the time said investments could be a confusing landscape where people can lose real money but "having a good adviser is like having a chaperone or even financial bodyguard”.
sally.hickey@ft.com
