Clients are showing more “caution” in the current economic climate, according to Elizabeth Caley, an IFA at Aegis Financial Planning.
Speaking to FTAdviser, Caley said she has had many conversations with clients in which they expressed unnecessary discretion around their finances.
She stated: “I’ve had a lot of conversations with clients in their 30s and 40s or prospects who are very concerned about their finances, even though actually they are in quite a robust position for their age.”
This worry was attributed by Caley to a number of factors, one of which being a lack of financial education.
Causes of caution
She explained her belief that some level of financial education or advice is “really important” and that, a lack of such education could lead to “people leaving a lot of money on the table”.
She also pointed out this was a problem that particularly affected younger savers due to them not being specifically marketed towards and, as a result, “they just miss out on that advice".
The perceived worry was also attributed by Caley to the current media environment, as she explained: “There’s a lot in the media in terms of inflation.”
Explaining how this is made worse by a lack of financial education, Caley said: “Because some people lack appropriate financial knowledge, when there’s a lot of stories about finance in the press, they don’t really know how to navigate it.”
She additionally identified a focus on the short term as driving this caution: “There seems to be a lot of short termism at the moment where people don’t want to make moves really at all.”
What can be done
Caley discussed what could be done to address these issues and make clients feel more at home with their finances, such as conversing more with them.
“Having more conversations with the clients makes them feel a bit more comfortable,” she explained.
She went on to detail her personal experience with this: “I had a conversation with someone who asked 'If I can get 4 per cent on my cash, I’m just going to leave it in there forever'.
“In response, I asked 'how much does that serve you? What would you like to do? What are your long term goals?'”
She also stressed the importance of building the confidence and knowledge of clients, something that she pointed out is the benefit of working with an adviser.
However, Caley warned that the use of information more broadly could be used in a manner that “isn’t appropriate for everyone” which could leave those in need of advice feeling confused.
“So I don’t think that always helps,” she added.
She also stated that pointing clients to areas in which they can find out more information if they want to become better educated can be import in nurturing this confidence and knowledge.
tom.dunstan@ft.com
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