‘Not normal times’: IFAs help staff through cost of living crisis

Inflation currently sits at 9.4 per cent in the UK, a 40-year high, and gas and electricity bills for the most vulnerable households in Britain are predicted to soar to an average of £500 a month in January.

“We are all aware of the swinging increases in the ‘cost of living’ and with little gains to offset that,” adviser Philip Milton told his employees in an email on June 23.

“Sadly in this context we are in one of the industries which doesn’t benefit – higher inflation can worry investors and the markets and so our funds we manage fall and hence our income declines whilst all the costs rocket.”

As a result of the economic backdrop, Milton decided to make what he has named a “cost of living award” to everyone on his company’s books.

I suspect the next 12 months will be tough for many, and we need to support them [employees] where we can.Phil Billingham, Perceptive Planning

The financial remuneration will be staggered over two payments, the first arising in the autumn, and every employee at the Barnstaple-based firm will receive the same amount.

Milton is hopeful that inflation will fall, along with energy prices.

“Dare I say that I am in the minority in economics’ terms by expecting inflation to fall quite dramatically, including energy prices,” he told FTAdviser.

“I was also in the minority by predicting that inflation would rocket and exceed everyone’s views of 2 per cent”

Milton is not the only advice firm boss giving his employees a financial boost as prices climb.

Perceptive Planning managing director, Phil Billingham, has awarded his employees with a “one-off top up” and said he is “keeping an eye on the situation”.

Billingham added: “I suspect the next 12 months will be tough for many, and we need to support them where we can."

The firm gave all employees above-inflation pay rises earlier this year. But since then, Billingham noted “inflation ran away from us”. 

He said: “We sat down and awarded another significant amount as a catch-up. It’s not a bonus, it’s not going on luxuries, it’s going on fuel and their families.

“We don’t want our staff to feel like they have to ask for a pay rise. Staff who worry about money don’t do good work. It would seem unfair for them to deal with high-worth-individuals every day and then struggle to get by themselves on the bare minimum.”

Unfortunately, we don’t see things easing in the short-term and feel we may end up having to revisit this again in the winter.Chris Bryans, Richmond Wealth

But Billingham said he may have to look at another inflation catch-up payment at the end of the year.

'Not normal times'

Meanwhile, senior partner at Richmond Wealth, Chris Bryans, said his firm has introduced additional pay rises to help offset wage stagflation, as well as one-off payments.

“We recognised the particular circumstances that staff were in and sought to address this,” said Bryans.

“For example, some part-time staff had sought additional hours to help make ends meet.  There was a company-wide conversation around the impact rising prices were having on both clients and staff.”

As a result of this meeting, Richmond Wealth looked at each person's specific circumstances and aimed to help with additional hours, a further pay rise, a one-off payment or a combination of these things.

“Unfortunately, we don’t see things easing in the short-term and feel we may end up having to revisit this again in the winter,” said Bryans.

“We have wealthy clients commenting on the rising cost of eating out and having a glass of wine – this is a subject that would not have come up before. Clients are also reassessing their financial situation and some with very large pension and investment portfolios have questioned whether they need to cut back because of the impact of inflation.

“We are finding that those with longer memories have a real concern about what high levels of inflation can do to their wealth.”

Even at home, Bryans said employees are more conscious of what is switched on, what gas and electricity is being used and whether to improve loft insulation.

“These are not normal times.”

Nucleus helps staff earning less than £30k

Providers are also doing their bit to make up for disproportionate prices at a time of little to no wage growth.

In May, investment platform provider Nucleus introduced a ‘Special Assistance Payment’.

“With the current cost of living crisis and inflation hitting 40-year highs of around 9 per cent, Nucleus wanted to move quickly to support those in the business they feared could be hardest hit in the months ahead,” chief executive Richard Rowney told FTAdviser.

The company is making payments of £1,500 to its people on permanent or fixed term contracts who earn less than £30,000 a year.

Eligible staff are being paid in three equal instalments of up to £500 in May, July, and September 2022.

The firm also intends to review salaries and “legacy payment structures” in the annual remuneration process at the end of the year.

FTAdviser understands other providers intend to announce extra financial support for employees sometime in August.

ruby.hinchliffe@ft.com