Two ways COVID-19 affects financial advisers (and it’s not just income)

By: Hannes van den Berg, Chief Executive Officer of Momentum Consult

As financial advisers you’re at the coalface of the industry. Even though you project a strong, confident energy when you deal with clients you also have fears and anxiety to deal with. But the good news is, these concerns can be addressed and, if dealt with correctly, can even act as opportunities to renew and reimagine your business.

Events like pay cuts, layoffs and crashing markets aren’t within your control. But what you can control is staying in touch with your clients, keeping them up to date with the latest information from the markets and from product providers, and keeping them calm when every cell in their brain is yelling at them to do the opposite.

Financial advisers are directly impacted by any adverse rational or irrational decision made by their clients

COVID-19 and its impact on our economy has meant there is a lot more to deal with and challenges are coming at you from all directions, including:

• A significant increase in servicing demands from clients
• Lapses, paid-ups, surrenders resulting in the clawback/decrease of commission
• Decrease in advice/ongoing fees, as a result of lower asset values
• Cancellation of advice/ongoing fees, should clients cancel their relationship with the adviser
• Significant decrease in new business volumes
• Increase in Personal Indemnity claims and Ombud complaints from clients against the FSP and financial advisers for perceived incorrect/bad advice
• New-to-industry advisers, as well as advisers depending on substantial upfront commission will find it particularly tough and might potentially question the sustainability of their advice practice

It’s not just about income…there are emotional challenges too

As a financial adviser you have an inherent vested interest in and relationship with your clients – their success is your passion and purpose. When you see your clients struggling, when you hear the uncertainty in their voice or read their panicked questions in an email, it affects you emotionally during a time when the general psyche of our communities is already struggling with what is going on around us. As an adviser you are part of a client’s journey to success, and when they falter on this journey you can’t help but feel a sense of responsibility in helping them get back on track.

The remedy: Evolving your relationship with clients

I’m a big believer in the power of financial advice and how dynamic the role of an adviser is. You aren’t sales people, you aren’t just there to advise clients on financial matters. You are confidants, coaches and even become family friends. That is why, especially during a time like this, it’s important to switch things up and change your perspective on what you do. Now is the time to assist clients to navigate the current economy and act as a financial coach as opposed to filling a traditional product advice and sales role.

While this won’t solve all the challenges, it will go a long way in assuring clients that you are there for them – and WHY you are there for them – to help mitigate any rational or irrational decisions they might make. The power of the human spirit, of human relationships, has never been more evident than it is now and you hold that power in your hands. Things will recover, the sun will shine again. Until then, it is up to you to make sure the decisions they make today and ensure a positive, financially stable tomorrow.