Advisers are feeling resilient in the face of the looming second lockdown, claiming that both clients and staff have gotten used to working within restrictions and that most providers have improved their service.
Prime minister Boris Johnson announced to the nation on Saturday (October 31) that the UK would be plunged into a second lockdown from Thursday (November 5), with mixing of households banned and the population encouraged to work from home where possible.
It mirrors the restrictions imposed at the end of March at the start of the coronavirus crisis. At the time, this caused an issue for an industry reliant on face to face meetings, wet signatures and paper trails.
But the industry is feeling bolstered by its previous handling of lockdown measures as it faces another period of restrictions.
Tim Harvey, director at HR Independent, said despite the fact he was in the midst of cancelling and rescheduling face-to-face meetings, it would be “life as normal” for his firm throughout the second lockdown.
He said: “Clients are being pragmatic and either choosing to move their review or do it virtually. But we’ve been through this before, so no one is panicking.
“New business is still coming through and we have appointments in place from referrals, so it all seems normal, really.”
Mr Harvey did raise concerns that advice firms which were more reliant on new business could feel the pinch, but again stressed that such businesses had been through the same issues earlier this year.
In terms of providers and the level of service provided, Mr Harvey said you could reach the conclusion that some firms were either “breathtakingly incompetent” or “genuinely don’t care about IFA services”.
He added: “Given that companies had four months in which to get it right last time, I’m convinced those that failed to get it right won’t do anything different.”
Changing face of advice
It would be an “understatement” to say that life would not go back to how it was before the pandemic and advisers would have to adapt their behaviour, warned Billy Burrows, retirement director at Better Retirement Group.
But he added that this paved the way for positive changes in the way clients will be advised in the future.
For example, advisers will have more regular contact with their clients through better use of video conferencing.
He said: "One of the many advantages of using video conferencing is that we can speak to clients more often and without the need to travel or intrude into their offices or homes.”
Mr Burrows said in the future there would be more of an emphasis on longer term retirement planning, for example cash flow modelling, and on risk management especially in terms of investments.
Mr Burrows said: “We are finding that many clients want to discuss a wider range of topics such as ‘de-risking’ their pensions and investments, wills, LPA’s and IHT planning.
“I would hope that most advisers have readjusted to the challenges the pandemic has thrown up so they should be well prepared for the new lockdown."
Meanwhile, Tim Morris, independent financial adviser at Russell & Co, said advisers were much better prepared for lockdown this time round and had the provisions in place to deal with any issues.
He said: “We better understand the risks and clients are being more pragmatic. I think the increased understanding means that many people feel less concerned and more comfortable about the impact of the virus on their finances.”
Added pressure
Keith Richards, chief executive of the Personal Finance Society, said advisers had swiftly adapted in March to offering advice via remote meetings and were “generally well positioned” helping clients in the second national lockdown.
But he warned a further lockdown would bring “extended financial pressure” for some firms.
A recent poll of 128 PFS members showed 37 per cent had seen a decrease in new client queries as a result of the first coronavirus lockdown.
Mr Richards added: “The need for professional advice will only increase in the challenging months ahead and we have to make sure that increased need turns into increased demand.
“Unless action is taken to address the escalating cost of consumer compensation and professional indemnity insurance premiums sadly not everyone who would benefit from financial advice will be able to access it.”
Mortgage brokers
Mortgage brokers, who took a hit when the initial lockdown put a halt to property transactions, were optimistic after the housing secretary Robert Jenrick confirmed the housing market would remain open during the four-week lockdown.
Mark Harris, chief executive of SPF Private Clients, said the national restrictions being introduced this week would be “noticeably different” from the initial lockdown.
He said: “So long as Covid-secure practices are followed, we are not expecting activity to drop off a cliff like it did during the spring lockdown.”
David McGrail, compliance director at First Mortgage, also said a downturn in activity should not be as severe as during the previous lockdown.
The initial lockdown effectively closed the property market in England between late March and mid-May.
Data from the Bank of England last week found the number of mortgage approvals for house purchases in September were around 10 times higher than the “trough” of 9,300 approvals in May.
First Mortgage’s Mr McGrail said: “We are more tech savvy than we were going into [the first] lockdown and as such, feel more prepared to handle what is thrown at us during this second lockdown.
“Our staff are now more experienced and skilled on video conferencing which is important as face to face meetings will no longer occur within our English operation during the new measures.”
Paraplanning demand
On the other hand, paraplanners see the lockdown as a positive as it will mean more advisers will turn to them for help.
Michelle Wilson-Stimson, managing director at outsourced paraplanning firm Eparaplan, said demand for services from adviser clients had increased in the aftermath of the first lockdown.
She said: “Our adviser firms are still servicing their clients via methods such as Zoom and Teams video calling and as such we are still very much needed and still very busy supporting those firms and their clients.
“With many firms being forced to work from home and manage employees at a distance it has made advisers look at using a “pick up – put down” service or an ongoing one that requires less daily management and more accountability.
“With a huge number of people being placed on furlough and even made redundant it has made adviser firms rethink the way they work as a whole.”
amy.austin@ft.com, chloe.cheung@ft.com, imogen.tew@ft.com, rachel.mortimer@ft.com
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