Podcast  

What did 2020 teach us?

 

Put aside the pandemic panic and concentrate on long-term goals: these are the lessons 2020 has for financial advice clients.

This was the overarching message from commentators representing the retail investment, pensions, protection and mortgages sectors who appeared on the last FTAdviser podcast of 2020. 

Keith Ashworth-Lord, founder of Sanford DeLand Asset Management, said: "People's risk-averse nature really got the better of them this year, and we saw an awful lot of panic.

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"What you have to get over [to people] is that it is not timing the market that matters, but time in the market that matters."

According to Helen Morrissey, pensions specialist at Royal London, people in both decumulation and accumulation were panicking over their pensions. She said: "It brought up interesting issues around what people's understanding of what a pension is, what it does and what these are invested in."

She said the main message of 2020 was to "stay calm" and remember that pensions are a long-term savings structure.

For Andrew Montlake, managing director of Coreco Mortgages, the need to cope with sudden changes in 2020 has been a good lesson to learn for the year ahead.

He said: "We all wondered if we would have businesses to go back to when lockdown ended, but the communication has been brilliant and everyone [in the mortgage industry] has tried to help each other."

Kathryn Knowles, managing director at Cura Financial Services, said the insurance specialist advisory firm had experienced a similar amount of panic-induced calls from people seeking to protect their incomes in the event of sickness.

However, with the rush to get cover happening in February and early March, insurers started to get the jitters, meaning many people who would have been able to get cover in January were no longer able to get the cover they needed in March.

As an example, Ms Cura said: "We had an experience with one client. We had spoken with him in the morning and, in the space of two to three hours of being able to get him income protection, the cover was changed to income protection with a Covid exclusion.

"A few hours had completely changed the possibility for this person, and he was a front-line worker and he did end up having Covid."

Education and communication

The panellists said education and proactive communication would go a long way to helping clients meet any unexpected challenges in 2021.

Ms Knowles added: "Do not make rushed decisions. Speak with someone and see if there is something that could be done."

On an economic level, the panel said it was important for policymakers to focus on getting the UK past the 'Brexit hurdle', as trade talks drew to a close at the time of the podcast. The over-riding focus was on meeting potential challenges with a positive attitude.

"Keep calm and carry on. Pensions are a long-term game. Do not get spooked by short-term challenges", said Ms Morrissey.