CoronavirusApr 23 2020

The questions coming from clients

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The questions coming from clients

In the first few months of this year, financial advisers might typically have expected to face pressing questions from clients about tax.

In the run up to the end of the tax year on April 5, clients’ minds were more likely focussed on making the most of their Isa and other allowances before the new tax year.

But this year advisers have had to field rather different questions and concerns from clients as the coronavirus pandemic caused UK stockmarkets to go into freefall in March, with the FTSE 100 tumbling below 5,000 at one point.

Markets were rattled as Covid-19 spread across Europe to the UK, and prompted the UK government to announce a lockdown as the number of cases climbed.

This left many clients, whether they are business owners or nearing retirement, uncertain about what the immediate future might hold.

Client concerns

Jiten Varsani, mortgage and protection adviser at London Money, says the pandemic has prompted people to think about the financial impacts on them and their families.

“For many, this is from a lack of resilience to a major income shock, be it a complete loss of income or a reduction in income,” he notes.

“During the initial phase of the market turbulence, we had questions about the sudden drop in values and increased volatility,” says Krupesh Kotecha, financial planner at Balance Wealth Planning.

“As expected, clients were naturally concerned, with some asking if they should sell everything to limit further damage.”

He explains: “This allowed us to remind them of the planning we’d put in place before the event.

"For example, we recommend that clients should hold at least six months of expenditure in cash and as part of our cashflow modelling, we account for a market crash scenario.”

Jay Rooney, financial adviser at One and All Financial, recalls that in the first couple of weeks in March he received similar calls from clients who were concerned about the stockmarket falls.

“Then, in the last 10 days of March that changed massively because suddenly it went from our investment clients being worried about the state of their investments to all of our clients being worried about their income – in particular, our business owner clients,” Mr Rooney says.

“By far the most common question is, ‘am I still on track to achieve what I’ve set out to do?’” says Jason Bolton, director and chartered financial planner at Beaufort Financial.

“Clients want to know if they are still likely to meet their primary objective and, if not, what they need to do to get back on track.”

Mr Kotecha also began to receive a range of questions from clients following initial concerns about the stock market volatility, including:

  • I had a planned purchase which is not on hold, where should I draw this from?
  • Is the cash in my bank account safe?
  • I was planning to retire in a few months, should I change my plans?
  • Should I pay into my pension as planned?
  • Is this the right time to invest?

“This tells us that clients are most concerned about the practical aspects of their finances in the short term, while being concerned about their long-term financial security,” Mr Kotecha suggests.

The answer to the question of whether stockmarket declines present clients with an opportunity to invest is going to differ depending on the client and their financial situation.

As with all crashes, the recent falls typically prompt one of two conversations, according to Scott Gallacher, chartered financial planner at Rowley Turton Private Wealth Management.

“Firstly, from more conservative clients concerned about the impact of those falls and, secondly, from those clients looking to invest more to ‘take advantage’ of the falls,” he explains.

“One key difference with this situation is perhaps the government’s sensible option of furloughing staff which will lead to some changes in people’s actions.”

Mr Gallacher recalls that in previous market crashes, advisers’ clients might have been laid off and had to effectively take early retirement.

“Whereas now, with furloughing an option, I suspect that the opposite will happen, that is, people that would have naturally retired will be happy to be retained on 80-100 per cent of their salary.

"This could have a negative impact on advisers by reducing new business enquiries,” he cautions.

Taking cover

Mr Rooney observes that more recently, he has been “inundated” with enquiries about life insurance, even from clients who were previously not interested in buying protection before.

Mr Varsani points out that the questions he has received from existing clients have been focused around policy wording and reassurance that, in the event of death or long-term sickness, their existing life cover and income protection policies will pay out on a claim.

“From prospective clients there have been two main types of enquiry,” he continues. “The first from those who have been meaning to review and arrange cover for a while but have kept putting it off.

“The reality of Covid-19 has hit home that we truly never know what is around the corner. Sadly, some have been affected via the loss of a family member or friend.”

He says: “The second type of enquiry has been from those interested in taking cover ‘until the Covid-19 pandemic is over’. These are dealt with via a more considered and careful approach. As an advisory business we need to ensure policies are taken for the right reason.

“For those clients who see the wisdom of long-term protection, we proceed towards the advice process.”