New research from The Openwork Partnership shows advisers estimate around one in eight clients have suffered financial damage during the COVID-19 pandemic.
Mike Morrow, Chief Commercial Officer at The Openwork Partnership, commented, “The value of financial advice and financial advisers will be very important as the UK starts to recover from the financial impact of the crisis, demonstrating how vital advice is and the role it plays in what are very personal situations.”
The nationwide study was conducted among 100 advisers across the UK by Pollright in January 2021. It found that advisers on average believe 12% of their clients have taken a financial hit because of the impact of the pandemic with just 8% of advisers saying none of their clients have been adversely impacted.
The biggest issue advisers have seen is clients stopping saving or investing during the pandemic – 48% of advisers say they have clients who have done that – while 32% say they have clients who have run down savings during the pandemic.
Morrow continued, “Its been a tough year financially for millions of people despite unprecedented levels of Government help and advisers are seeing the impact on the ground.
“Of course, many people have benefited financially during the crisis with more money going into savings but one in eight clients on average suffering losses is bad news and particularly so when people are taking money out of long-term investments to keep going in the short-term.
HMRC data shows around 1.778 million people have withdrawn £12.04 billion in flexible payments from pensions between January 1sts 2020 and March 31st, 2021, during the pandemic with average withdrawals in the first three months of this year at around £6,800, slightly down on the same period in 2020.
Worryingly 19% of advisers say they have clients who have taken money out of pension funds to tide them over during the crisis while 31% of advisers say they have clients who have taken tax-free lump sums from pensions earlier than planned.