Advisers and clients must focus on the future

While their first concern may be about their health, money worries are not far behind, which is understandable.

People are worried about their jobs and their businesses and with so much uncertainty ahead, no one can be terribly confident about making a decent crust in the future.

People are relying on trusted advisers to help steer them through the confusing days ahead

But that does not mean people are not planning for the future.

They certainly still are, which means they are relying on trusted advisers to be on hand to help steer them through the confusing days ahead.

It is difficult to make any serious predictions at the moment.

But one thing that is clear is that we are developing new words and phrases to guide us through these times.

‘Social-distancing’ and ‘self-isolation’ trip readily from the lips of everyone.

‘Key worker’ is another one that has been bandied around a lot, particularly as there has been much debate over what actually constitutes a key worker.

Do you agree that a journalist is a key worker, for instance?

The government obviously believes so as the profession was part of the official list it published. Financial adviser was not.

I do believe that journalists are key at such crisis times, if only to ensure that official decisions are questioned and questionable practices are highlighted.

I have noticed a massive increase in so-called fake news being spread around on social media, which is annoying at the best of times, but seriously dangerous when the information causes people to make wrong decisions that can hit their health.

The flow seems to have slowed, which suggests that people are finally learning the lesson that simply forwarding stuff without checking its veracity can be dangerous.

I hope that everyone takes that lesson on board when passing on financial information, which can obviously be equally as harmful.

Even during the crisis there have been many misleading claims shared about what people can trouser from the government’s handouts, for instance, or suggestions that payment holidays mean they can walk away from debt.

Keeping on top of all these dodgy rumours is important. It is a task that financial advisers should be involved with too. You may not be regarded as key workers, but your advice is essential at the moment.

Helping your clients keep their focus on the long term and avoid making costly short-term decisions is just part of it.

There is also the chance to increase everyone’s financial knowledge.

We have seemed to be lurching from one naming and shaming story to another in recent times, especially when it comes to cash.

If it is not government ministers having a pop at Premier League footballers for earning too much, it is big companies being criticised for handing cash to shareholders while drawing on government money.

Supermarket chain Tesco, for instance, was forced to defend itself after it handed investors £900m in dividends, despite having taken £585m from the government’s business rates relief holiday.

Those figures could look shameful, but anyone with any understanding of finance can see it is a case of adding two and two making five.

Dividends are an interesting issue. Are they bribes to shareholders?

Of course not. They are rewards. Effectively a company says, ‘invest with us and we will give you some money back if all goes well’.

Without dividends, most pension savers would struggle. They are a really important income stream for many savers, pensioners and institutional investors, including pension funds and charities.

They are crucial in making stock market returns effective. After the FTSE 100’s dramatic falls, the blue-chip index had a couple of relatively good days.

But even then, I pointed out, it had only recovered back to a level it had first reached 22 years earlier in 1998.

In other words, if you had invested back then in the FTSE 100, 22 years later the amount would have been the same.

Someone was quick to point out that an investor would have pocketed 22 years of dividends and so would be much better off despite the index turmoil, which is true (ignoring any charges, of course).

And that underlines why dividends are so important to investors, even though most ordinary folk may not even realise that.

At a time when the Bank of England is demanding that banks and insurers scrap dividends temporarily because of unforeseen problems ahead, it is an opportunity to help clients understand the finance behind the headlines.

Start the dialogue with them now about why it is important that companies that are cancelling dividends, restart them as soon as possible.

Once they understand that, they will hopefully be more reassured about the importance of long-term financial planning.

Simon Read is a freelance journalist