James ConeyNov 11 2020

We must make the most of the lockdown sequel

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In the history of rotten sequels, lockdown part II has to be right up there as one of the most depressing and unwelcome. 

Still, despite the disappointment that we have been here before, businesses that have been able to adapt in the financial services sector are in a much better place than first time round.

I know many advisers moved swiftly, at great expense, to make sure that they could keep operating and helping clients.

So what did we learn from the first wave and will it be the same? 

We have all learned a little more patience since the first lockdown

If the first lockdown was about accelerating existing trends: remote working, online retailing, alternative methods of transport, and contactless technology, then this time is likely to be more about embedding. 

Thankfully we have not – at least at the time I write this – had the same endless days of rollercoaster markets to put up with and navigate, though we did have 48 hours of sell-offs.

More chaotic has been the market’s shaky reaction to uncertainty over last week’s US election.

From the advisers I have spoken to, clients have not been hammering down the door wanting to know what is going on, as before. Rather they are ready to sit it out and see what happens on the other side of Christmas.

Which shows that we have all learned a little more patience since the first lockdown.

Clients are also used to the technology now. I have heard several amusing tales of advisers who became ad hoc tech consultants with some more doddery clients first time round, as they tried to help them install Windows updates and guided them through app downloads to help them have virtual meetings.

There is no need to waste time on this now as it is all set up. That means this early investment in time capital is going to start paying off. 

The real question the latest lockdown poses is: what else is to come in terms of retirement planning?

We know that two groups of workers have been hit hardest by redundancies so far: the under-30s and the over-60s. For this latter group there are some serious questions to be asked about retirement strategy and investments, given the jobs market they might be facing.

On top of this, the new wave of jobs support packages unveiled by Rishi Sunak means billions more is being added to the national debt, which in turns means the likelihood of lower rates for longer, and in turn, the growing challenge of how to help clients generate an income.

This is the minefield that awaits once the lockdown lifts. Plotting a pathway to retirement for clients who have had their carefully planned pathways disrupted as they walk into a financial world we have never seen before is going to be the biggest challenge of all.

Thankfully we are all learning how to change with the new times every day.

So just like all bad sequels, this one will be less scary and more predictable, though sadly it still contains the same main characters.

Banking bias

We are creating a band of second-class financial citizens across the economy. The self-employed and young people are at risk of becoming financial pariahs because of the way the current banking and insurance landscape is shaping up.

You cannot get a mortgage, your credit status is ruined and do not even think about applying for a life or income protection policy, particularly if you have suffered any kind of stress or anxiety.

This kind of separation between the haves and have-nots really is unhelpful for an economy that is trying to get back off its knees.

It is particularly devastating as it was the boom in the self-employed, people who created start-ups and the young people that went to work in our dotcom industries that helped Britain regain its status as a financial powerhouse after the last crisis.

Now these people are being treated appallingly. It is no surprise that a recession leads to credit tightening. It is no accident, though, when banks decide to pick and choose which customers to support the most.

Freedoms at work

I am getting a bit tired of the anti-pension freedom rhetoric. Latest figures from the Department for Work and Pensions showed while the number of people cashing in pots had risen by 6 per cent to 347,000 in the third quarter of this year, the amount they took on average fell by 7 per cent to £6,700.

This is not people irresponsibly buying Lamborghinis; this is not even people buying a Ford Fiesta. It is people pragmatically taking out small pots – exactly the kind of thing the rules were designed for.

James Coney is money editor of The Times and The Sunday Times