By Shannon Fox DipPFS, Education and Training Coordinator and co-leader of Lowes Financial Academy.
Most industries have suffered at the hands of the COVID pandemic, however financial planning has emerged relatively unscathed. So how is the financial services sector so resilient in the face of crisis, and why should more young people be considering a career as an IFA?
There’s no denying that COVID has had a devastating impact on the economy. Businesses have fallen like dominoes; global financial markets were plunged into turmoil last spring, with the FTSE 100 suffering its worst day since Black Monday in 1987. The grim reality is, we’re predicted to be entering into the worst global recession we’ve seen since the Great Depression. This unrest has sent shockwaves of panic throughout society, which has been compacted by the soaring rates of unemployment and a dwindling furlough scheme.
These external factors have a huge impact on us as individuals, trickling down into our personal spending behaviours. Unsurprisingly, COVID has spawned a new age of cautious spenders. A recent survey from the Bank of England found 57% of UK households decreased their spending, even if their income remained unchanged, preferring to put extra into savings. Another study from McKinsey showed 91% of those planning large purchases pre-COVID said the pandemic had halted those plans. This is in stark contrast to the previous relatively carefree approach to personal finances; according to GoBankingRates, over 20% of us didn’t even have a savings account and nearly 30% didn’t have an emergency fund.
Looking at the economic climate, there has never been a more important time to take care of personal wealth. The pandemic has given people time to reflect on what they want from their money and has shifted priorities; many are looking to safeguard themselves and their families against any future crisis. So, people are saving more, but do they know what to do with these savings? Should they be investing? How can they ensure they have enough for retirement, or to leave to their family members?
Accelerating appetite for advice
With managing and building on wealth at the forefront of people’s minds, Financial Advisers couldn’t be more relevant. It’s assumed that industries across the board have suffered during COVID, however financial advice is one of the rare sectors that has remained relatively unscathed. The appetite for advice has not diminished; more than ever people need to know how to properly invest and save their money.
In saying this, financial advice is in demand during the economic highs as well as the lows. During the highs, the public have more money and so are naturally less cautious. They’re often open to being experimental and investing in different areas. However, they’re rarely so frivolous that they wouldn’t seek out advice before putting their hard-earned money down.
In fact, some have pinpointed an opportunity during COVID. Although there has unfortunately been closures of physical stores and offices, there’s been a spike in online businesses during the pandemic. A June 2021 report from Ofcom has found British consumers spent a total £113 billion online throughout 2020, a rise of 48% on the year before. This is a lucrative market to enter into as many consumers prefer the flexible nature of online, whether this be for shopping, learning, or connecting with others. It’s also preferable for the business, saving money on expensive rent. As this shift to the digital world continues to build momentum, those who are looking to build an online presence will need advice on how to get started from a financial standpoint. Financial Advisers could just be the catalyst to a revived economy.