Covid-19 will have a lasting impact on people’s personal finances, and consequently the regulated advice sector, says John Somerville, head of Financial Services, Professional EducationThe London Institute for Banking and Finance (LIBF). So how can an advice firm gear up to survive in the post-pandemic economy? And what mix of skills will be needed in the new normal?
The pandemic and subsequent lockdown have hit the economy hard. Some people are finding themselves in financial distress for the first time in their lives and many are readjusting their savings and investments to replace lost income or help family members.
Add to that an increased demand for protection products, and you could say that consumers now need professional regulated advice more than ever.
Despite that, we know from previous financial crises that the road is rocky in times of recession. The need for regulated advice may be stark. Demand may be on the up. But neither of those facts guarantee the future of advice firms.
Build up your advice business
One answer could be for regulated advice firms to join forces to ensure they can provide the fully comprehensive service that consumers will need in the new normal.
There are plenty of cases where financial and mortgage advisers already benefit from introducer arrangements. Mergers could build on these good relationships and provide better opportunities for both sides of the new business.
It’s a natural fit. Later life planning, for example, already brings together mortgage and equity release advice with pensions, investments and savings.
Covid-19 has caused a spike in the number of consumers seeking to access cash through equity release, although they’re borrowing smaller sums – possibly to tide them over during a period of hardship.
It’s a change of behaviour and hasn’t been missed by the FCA, who have expressed concern “that firms and their advisers get their advice right” – including through a thorough exploration of all the options.
Equity release may not always be the right solution, although it may be the first thought that springs to a client’s mind when they’re reviewing their finances. It’s essential to be able to weigh up a customer’s options professionally and that requires specialist expertise.
When it comes to protection products, the need for good advice has arguably never been greater.
There’s a danger of some consumers getting the wrong advice through a DIY approach using market comparison websites.
Trawling through the internet looking for the ‘cheapest’ deal can easily result in buying the wrong mix of products. Financial products are complex and there’s a high risk of paying for something that doesn’t provide fully comprehensive protection and is more expensive in the long run.
Consumers increasingly need a holistic approach. This is underlined by the rise in demand for products like life insurance, which is predicted to grow – spurred on by the current pandemic. A rise in enquiries about financial protection policies has also been reported in the trade press.
Issues around retirement planning, inheritance tax, wills, legal power of attorney and pensions, are hugely complex. If mistakes are made, the consequences will affect clients and their families for many years – even decades – to come.
Fill the skills gap and show your worth
As consumer behaviour continues to shift and evolve in the wake of the pandemic, our services – and our companies – need to respond by offering a fully comprehensive suite of services.
That means keeping skills up to the minute. It’s worth looking at the skills gaps in your firm so that you can properly identify where best to invest in learning and development.
Looking back at previous crises, the firms that survived were the ones that continued to give clients excellent service. Reputation and word of mouth go a long way in the advice industry.
In a competitive market, your firm will want to demonstrate its value and there’s no better way to do that than by becoming chartered. If you have three years’ relevant work experience and you complete the Advanced Diploma in Financial Advice (Adv DipFA) you’ll be eligible to apply for chartered status.
In the mortgage space, the Certificate in Regulated Equity Release (CeRER) and CeMAP Diploma will both help you differentiate yourself from other advisers. While applying for CeMAP Professional is a no-brainer for anyone who regularly keeps up with their continued professional development (CPD).
For the regulated advice sector, a disrupted and rapidly evolving market means survival of the fittest. By pooling our knowledge and talent – and keeping our skills up to date – we can continue to show the value we offer in a post-pandemic world.
