Given that the cost of living crisis has only really begun to have an impact in recent months, these are sobering numbers. And an important signal for advisers to have conversations with clients now in order to limit the potential damage that could be done.
Of course, the Chancellor’s Cost of Living Support package announced last month will go some way towards helping households with their energy bills. But it won’t relieve all the pain as it only covers utility bills, whilst other costs (transport and food) will continue to rise.
So where to start?
The report showed that those over the age of 60 were mostly concerned with how rising inflation would affect both their own standard of living and their ability to support the next generation, whereas those under the age of 40 voiced concern on whether they would be able to purchase their first home. This is valuable information when it comes to tailoring advice for clients.
Furthermore, providing guidance on specific products and services is most useful within the context of a wider financial plan that helps clients to take a longer view on the coming months – possibly even years – and how these might be navigated.
This wider plan might include, for example, guidance on how debt might be managed, how the young can continue to save towards their retirement or, indeed, buying a first home. Given the unprecedented nature of the times we are living through, regular contact may be beneficial in order to review plans and update these where necessary, to reflect the evolving situation.
When it comes to buying a home, clients may often be unaware of the help that is on offer and available to them. The government does, however, offer a range of property purchase schemes – shared ownership and 95% loan-to-value mortgages, amongst them – enabling first time buyers, in particular, to get a foot on the housing ladder even if they have a smaller deposit.
For existing homeowners, issues may be a little different and may include, for example, difficulties meeting monthly mortgage repayments. In these situations, an extension of mortgage terms can help reduce monthly outgoings, providing respite. For older homeowners, equity release is a potential means of supplementing income that could be considered.
There are solutions available – the important thing is to remember, whatever the circumstances your clients are facing, an open and honest conversation today could leave them in a much better financial position.
Even small changes can have a major positive impact on a client’s financial wellbeing. And for advisers, a happy client is likely to turn to you again in the future for help with other products and services.
Nitesh Patel is Strategic Economist at Yorkshire Building Society.
[1] https://www.ybs.co.uk/inflation-nation/index.html
