Taking the flexible lessons of lockdown forward

Taking the flexible lessons of lockdown forward

Forget 9-5, 24/7 or any of the other working monikers we once used – right now, we’re talking about tiers, local lockdowns and circuit breakers. Our working lives continue to change along with regional restrictions, but it seems we’re taking it all in our stride.

Adapting to ongoing changes

Our latest Adviser Barometer survey took place in August, just as working from home rules were starting to relax and prior to the more recent re-tightening of restrictions in some areas.

The overall picture is one of resilience, pragmatism and above all, a willingness to adapt working patterns as and when necessary, as advisers have faced significant changes to the way they interact with their clients.

An obvious difference is the way in which advisers and clients meet. A small but significant number of advisers had already started the move to digitising their advice models, even before pandemic rules made it necessary. Prior to lockdown, just over half of advisers (52%) had met all their clients face to face at least once, suggesting advisers were using other communication methods and not relying on a physical meeting to establish a relationship. Naturally, this has increased significantly since March.

Mike Hogg, Head of Platform at Aviva, commented: “It is clear that the pandemic is moving the UK in line with other advice markets where remote advice models are more prevalent. The long-term question is whether we will see more advice businesses permanently remodel themselves around a ‘digital first’ philosophy, allowing them to compete nationally, increase productivity or serve clients with less investable wealth.”

Client responses

Clients’ reactions to the new world of advice have been positive. 66% of advisers agree that clients have been more accepting of changes to business models than they would have expected.  Most advisers agreed their clients understand market volatility, but an interesting change in clients’ behaviour has been an increased interest in their investments since the crisis started, with over half of advisers (54%) agreeing they have seen this from their clients.

Nearly three-quarters (72%) of advisers also say that their clients have taken the long view and are not actively looking to change their investments. However, the volatility has been a catalyst for more contact – 59% say that they have been in more frequent contact with their clients than previously, preparing the ground for ongoing discussion and advice as conditions continue to change.

“We haven’t seen advised clients hit the panic button during the pandemic. Drawdown levels have been stable and there hasn’t been a massive flight to cash, allowing clients to participate in the recovery.  The results show this composure is the result of adviser education and intervention, another reason why ongoing advice is worth paying for.” Mike Hogg

Future working

“Advisers and their clients were very forgiving of the temporary changes to provider service that were necessary to make the transition from office to home working earlier this year.  Remote working is now ‘business as usual’ and advisers should not expect any disruption if widespread lockdowns return.  Providers should also be capable of making technology changes as normal; our programme of platform investment and change has continued.” Mike Hogg

The majority of advisers (59%) believe they will all return to the office eventually, with just 17% saying they don’t need offices anymore. However, 70% believe adopting more online processes will save on business costs significantly and 42% say that they are doing more of their own admin now - another potential cost saver.

The rise of drawdown and retirement options

Almost two-thirds of advisers reported an increase in clients asking about Drawdown, with a similar number saying that enquiries about annuities has fallen over the last three years. The added complexities of drawdown vs annuities and the need for ongoing advice is borne out by ‘growth in the retirement market’ again being considered the best opportunity for growth going forward, in common with previous waves.

Other significant increases in enquiries over the last three years have been in clients wanting to phase their retirement income (51%) and wanting advice on how to retire early (53%).  It remains to be seen what impact Covid will have on retirement plans – 31% of advisers report that clients have delayed retirement plans because of the pandemic, compared with 25% who say plans have been brought forward. It’s probably too early to see trends coming through whilst we continue to live under Covid’s shadow.