5 things we’ve learned from 2020

It’s no exaggeration to say that 2020 has been one of the most unpredictable years that we have lived through.

You and your clients will have seen their liberties restricted, their business premises closed, and their health put at risk. Many will have been furloughed, worked from home, or spent much of 2020 working hard to keep their business afloat.

In such an uncertain and tumultuous year, we have learned plenty of lessons – particularly when it comes to helping clients manage their businesses and their finances. Here’s a look back at some of the things we have learned in 2020.

Clients need reassurance in tough times

One of the initial consequences of coronavirus arriving in the UK was that the stock market fell sharply. Indeed, in mid-March, the FTSE 100 experienced its biggest one-day fall since 1987.

Many global stock markets took a dive, with indexes losing up to 30% of their value in some cases.

If your clients have pensions or investments, these market dips had a direct impact on the value of their holdings. Sharp falls, coupled with sensational news headlines about market catastrophe, meant that clients were justifiably worried.

We spent a lot of the spring and summer reassuring clients. From reminding them that short-term market corrections are part and parcel of a financial plan, to focusing on their long-term goals and ignoring the ‘noise,’ part of our role as financial planners is to counsel clients through tough times.

Earlier this year we shared some useful information about how you can reassure your clients during stock market volatility. With the continued impact of Covid-19 and Brexit facing the UK in the spring, these tips are likely to continue to be useful for a while yet.

Clients can support the wellbeing of their employees

2020 has been tough for everyone. Many studies have found that the average adult’s anxiety and stress levels increased during lockdown, while many people have felt lonely or isolated.

Many of your business owner clients will probably have some form of employee benefits package in place. This may include a workplace pension, ‘death in service’ benefit or even income protection or critical illness insurance.

As well as these more common perks, business owners can also access useful Employee Assistance Programs and Early Intervention Services. These provide valuable benefits designed to support the wellbeing of staff, and 2020 has been the perfect opportunity for your clients to think about incorporating them in a group benefits package.

Services such as GP appointments, mental health support and counselling are accessible remotely through phone or video conferencing. Given the number of employees who are now working from home and isolated from their colleagues, these benefits support a focus on wellbeing.

These services can provide valuable protection to employees and their families at times of extreme difficulty, and are ideal for supporting workers during this period of heightened health and financial risk.

Covid-19 could affect your clients in the form of additional taxes

Last month, the Office for Budget Responsibility (OBR) predicted the government will borrow £394 billion in 2020/21, as a result of the pandemic.

Once the crisis is over, it’s likely that taxes will have to rise to plug the black hole in the public purse. There has already been speculation that reforms to Capital Gains Tax, Inheritance Tax, and pension tax relief could be ushered in next year.

Earlier this year, we wrote about how your clients could end up paying more tax when the pandemic is over. In the meantime, it could be wise for clients to seek advice on using their available allowances and exemptions before the Chancellor makes any changes.

Adding value to your clients

You probably find that your clients are more likely to seek advice from you when times are tough. Considering the struggles that many individuals, households, and businesses have encountered in 2020, the need for good advice has rarely been higher.

It’s the same when it comes to financial advice. We find that clients want to talk to us in volatile times because their circumstances have changed, their plans have been blown off course, or simply for reassurance.

This year, we have showcased several reports which have identified the clear benefits that financial planning provides to your clients.

For example, Vanguard found that while the exact amount may vary depending on an individual client’s circumstances, an adviser adds value through:

  • Behavioural coaching and helping your clients to maintain a long-term perspective and a disciplined approach
  • Employing cost-effective investments
  • Maintaining the right diversification through rebalancing assets and minimising risk.

A separate piece of research by the International Longevity Centre (ILC), reinforced the financial value of advice. Their report found that people who received financial advice between 2001 and 2006 were more than £47,000 better off, on average, by 2014/16 than those who took no advice.

Working with a financial planner doesn’t just add value in cash terms. A recent report from Royal London found that taking professional advice can make you more confident, more secure, and more in control.

Source: Royal London

Why your clients should choose Sovereign for financial planning

So, financial planning adds value. But why should your clients choose Sovereign above other financial advice firms?

During 2020, we have shared many of the reasons that we’re different, including:

Get in touch

We’re here to advise you and your clients on all aspects of financial planning. If you have clients who would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email or call 01454 416 653.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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