The Covid-19 crisis is reshaping the world of financial advice. The crisis has jolted advisers out of their comfort zone, forcing them to reassess their relationships with clients and to embrace technology in adapting to what will likely become the “new normal”. And it appears that most are rising to the challenge and, importantly, that consumers are not being compromised.
Two local surveys conducted over the past two months - one of advisers across several countries, and one among members of the Financial Planning Institute (FPI) - have highlighted the difficulties, but also the opportunities, facing advisers during these times.
An obvious challenge was working from home and not being able to meet clients in person. Linktank, a Cape Town-based consultancy that provides technology solutions to the financial services industry, recently sent out a survey to financial advisers asking how they had adjusted to a remote working environment.
Of the 352 responses, about 70% were from South Africa, but also from Namibia, Australia, the US, Canada, the UK, the Netherlands and Malaysia.
The survey found that half of the respondents (50.7%) were operating as normal, despite the restrictions of the lockdowns, and 18.2% reported that not only were they operating normally, but business had increased. The remaining 31.2% were operating on a limited scale. None had closed shop entirely.
On how they had found the transition to a remote working environment, 26.3% said it had been “really easy” and 43.4% “not too difficult”. A quarter of respondents said the transition had been difficult but they were managing, and just more than 5% said it had been “impossible”.
Most advice practices had the technology in place to enable remote working, including virtual consultations through videoconferencing.
About four-fifths (81.6%) of respondents said they already had the technology and processes in place, with two-thirds of this group reporting that they had to make some adjustments.
The remaining fifth (18.4%) said they had to “find and implement new technology in a hurry”.
Clients, on the whole, were not disrupted unduly through virtual consultations. Only 12.8% of advisers reported that the switch had generally not been well received by clients. More than half (56.4%) said clients had mostly been happy with the change, and 14.1% said there had been no disruption because they had already implemented video conferencing as a means of communicating with clients.
On whether these changes were likely to be permanent, only 8.75% of respondents said they would go back to working as before.
At the other end of the spectrum, only a small percentage (2.5%) said they would go fully virtual. Most advisers (68%) said they would probably have more virtual meetings with clients in future, and 20.5% said they and their staff would work more from home in future.
Jen McKay, a founding director of Linktank, says the prevailing view in the industry has been that both client relationships and staff relationships should be managed face-to-face, but the survey shows that “a new realisation may be dawning about the feasibility of virtual workplaces”, and they are likely to become a permanent feature of the “new normal”.
She says it came as a positive surprise that the transition to a virtual environment had largely been welcomed by clients.
On advisory practices that had found making the changes difficult or “impossible”, McKay says there is a likely correlation with those that had not kept pace with technology and were still over-reliant on paper-based systems.
“The bottom line,” McKay says, “is that clients have not been compromised during the lockdowns.”
FPI survey
The survey among Certified Financial Planner (CFP) members of the FPI showed that clients’ demands on advisers had increased during the crisis, with 79% of 761 respondents saying their clients had high or very high stress levels, and 37% reporting they had had an increase in queries from prospective clients.
The top five concerns among clients (320 respondents answered this question) were: unemployment or reduced income (79%), protecting assets (51%), managing investment volatility (38%), managing debt (36%), and liquidity (30%).
On the challenges they faced during the lockdown, the respondents listed establishing relationships with new clients (25%), planning in anticipation of a possible economic recession (21%), conducting client meetings by phone or video conference and not in person (16%), balancing the needs of clients with personal/family needs (11%), and dealing with the emotional needs of clients (11%). Only 8% saw working remotely from home as a challenge.
Lelané Bezuidenhout, the chief executive of the FPI, says: “This is a tough time for all, but CFP professionals around the country are not shying away from the challenge of improving the financial well-being of all South Africans and their families, even during turbulent times like this.”