Your Industry  

Advisers more satisfied with communication than clients

Embark surveyed 750 advised and unadvised consumers with a minimum of £100,000 investible assets, as well as 250 financial advisers.

It said the change in confidence amongst unadvised investors had caused a significant re-evaluation of their use of financial advisers, with one in three having considered seeking advice since the Covid-19 crisis began.

Phil Bungey, chief operating officer at Advance by Embark, said: “It’s clear that a key differential is the role that advisers play in the management of their clients’ investment portfolios and the confidence that this brings. 

“The ability of financial advisers to instil that confidence is a valuable attribute, particularly given the uncertain times that we are living through. It is an encouraging sign that many unadvised investors are considering seeking financial advice.”

Paul Cox, managing director at Pure Wealth Management, said he was increasingly being approached by "those who have self-served and fallen foul to premature exits from the markets as they hit new lows."

Scott Gallacher, chartered financial planner at Rowley Turton, said the value of an adviser was in the peace of mind the advice, even during a time of crisis, can offer.

Gallacher said "being forewarned is to be forearmed" and the ability to guide his clients through the pandemic resulted in "only had a handful of calls" from concerned clients.

However, the data revealed a notable difference between the confidence displayed by advised investors and financial advisers themselves, who were much more cautious than their clients about the impact of Covid-19 on their long-term financial prospects.

While 62 per cent of advised consumers said they were confident they will not be significantly financially worse off at the end of the pandemic, advisers thought a mere 39 per cent of clients won’t be worse off.

Confidence impacts investment behaviour

Research by Oxford Risk, a behavioural finance technology provider, found that confidence has a direct impact on investment behaviours and outcomes, with emotionally-led decisions costing investors on average 3 per cent per year, pre-Covid.

However, periods of high stress can cause investor losses to rise to 7 per cent a year from ‘emotionally-guided’ investment decisions. 

The research found that investors increasing their cash holdings due to uncertainty was a principal cause of investment ‘own goals’, costing them up to 5 per cent in investment returns a year over the long-term.

Greg Davies, head of behavioural science at Oxford Risk, said: “Times of stress can be very costly for investors. Decision horizons shorten, the emotional component of decisions increases, and we cling to the decisions that feel comfortable in the moment rather than those that are sensible for our long-term needs.