A change in working practices due to Covid-19 has heightened concerns about advice businesses and their vulnerability, with one in five citing a financial impact as a result of lockdown.
A survey of 275 advisers, conducted by Panacea Adviser, has found 27 per cent of advisers reduced their working hours due to the pandemic in order to look after children or because their offices were closed and they had less client work.
On the other hand, others found they had to work longer hours, with one respondent saying they worked “endless hours due to staff furlough”.
Many others cited significant changes to their routine, with one adviser claiming they had to work “late into the night” due to difficulty concentrating for long periods during the day while at home.
In total, a fifth of advisers said this change in working had impacted them financially.
While some advisers had only witnessed a 10 per cent decline in revenues due to not being able to carry out face-to-face advice, others told Panacea Adviser they have experienced an “almost complete loss of income” and had not had any new clients in three months.
This has led to an escalation in adviser vulnerability, with nearly two-fifths admitting lockdown and the challenges that came with it has caused unusual levels of stress and impacted their mental health.
Derek Bradley, chief executive of Panacea Adviser, said more attention needs to be paid to adviser vulnerability, especially since lockdown.
He said: “Consumer vulnerability has been on the Financial Conduct Authority’s radar for a long period of time and, despite the delay in the release of its ‘Guidance on the Fair Treatment of Vulnerable Customers’, it is still high on its agenda.
“However, the FCA has not appeared to be overly interested in understanding vulnerability from an adviser’s perspective, how they are coping with the impact of Covid-19, and the issues it has caused on both a personal and professional level.
“It is interested in financial health but one does, in fact, affect the other.”
Adviser denial
In total, 12 per cent sought third-party support during this period. According to Mr Bradley, there could be a misconception that advisers are there to help other people, during this time, rather than focus on themselves.
This was evidenced with one respondent saying IFAs are “supposed to be above these issues”.
Meanwhile, another adviser said although their anxiety can make it difficult to focus at times, they did not class themselves as vulnerable.
Mr Bradley said: “Advisers often assume the term 'vulnerable' applies to everyone apart from themselves”.
Tim Morris, IFA at Russell & Co, agreed that many advisers would not agree to being vulnerable, because it is a “taboo” subject, although he believes they could be classed as vulnerable at this time.
He said: “More recently, I’ve heard from those who haven’t been enjoying working from home. The social aspect is the part people miss the most.
“This impacts those who work in an office and the many advisers who are a one-person business and whose client meetings offer social interaction.
“The latter are especially vulnerable, yet I don’t know many who would admit to being in that bracket. This is always a taboo subject, especially in a predominantly male profession.”
He added: “Worryingly, the financial impact may likely get worse. However, there will very likely be a feeling among many [advisers] that they should set an example when it comes to their finances being in great shape. This may well not be the case for some at present.”
Coping mechanisms
Many advisers have sought help from friends and family, as well as the government, throughout Covid-19 to help them cope with stress and mental health issues.
Sheldon Martin, IFA at Medical & Professional Investment, said: “From a personal perspective it was initially a tough time mentally. March 2020 will certainly never be forgotten and is secured within my memory.
“The financial advice (FinTwit) community on Twitter was extremely helpful during this time, with almost too many individuals to single out – although Andy Hart (of Maven Adviser) deserves a special mention. I recall logging in more than ever.”
Rebecca Aldridge, managing director at Balance Wealth Planning, said many advisers are responsible for the mental wellbeing of the advisers they employ, as well as their own.
She said: “Working remotely and dealing with various pressures coming out of the lockdown isn’t easy and it’s especially difficult to provide support to others if you don’t know exactly what’s going on in their lives (illness, redundancies, financial problems etc) and can’t easily tell how well they are coping.”
Mr Morris added that advisers could also feel alone as they are unlikely to discuss any vulnerability with their clients.
He said: “Trust is a massive part of the adviser/client relationship and is difficult to build remotely compared with meeting in person. It is easier with existing clients who you know well. However, you can’t really be open with them about being impacted financially. That could well impact the integrity of the relationship.
“And while an adviser may feel comfortable discussing their state of mental/financial wellbeing with a client they know well, I think most would not be willing to disclose too much for fear of creating concern.”
Ronnie Taylor, chief distribution officer at Aegon said: "The Panacea Adviser survey highlights the impact Covid-19 is having on advisers at a time when advisers are playing an important role supporting their clients.
"The last few months have been testing for everyone but advisers have played a critical role supporting their clients through what has been a difficult time for many. The volume and nature of the work, along with having to adapt to a new working environment has placed a significant strain on many advisers but it’s at times like this the value of financial advice really comes to the fore.
"Aegon is working hard to make it easier to conduct business and are engaging advisers to understand what more we can do to support them and their clients through this difficult period."
amy.austin@ft.com
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