After the Covid-19 crisis has passed there is going to be a huge rise in demand for financial advice, but are you going to be able to cope? Asks Ken Davy. You will, says The SimplyBiz Group chairman, if you are ready to learn the lessons from almost 50 years ago…
In 1974, following two years of falling values, the UK stock market had collapsed by almost 75%, with commercial property not far behind. Catastrophic as this was, inflation made its impact even worse, resulting in the average portfolio falling 90% in real terms over the 73/74 period.
As I had only become a financial adviser at the end of 1970, this cataclysmic decline taught me some valuable lessons about the fragility of investment markets, along with the vital importance of building and keeping strong client relationships. Indeed, throughout this traumatic time I hardly lost any of my approximately 200 clients, which I believe was down to three simple reasons.
Firstly, throughout the downturn I kept in touch with my clients on a regular basis, usually by telephone. Not because I had any answers to their obvious concerns - as frankly I had no more idea than they did as to when the market slump would end - no, the key reason for keeping in close contact, was so that they knew I was there for them and, very importantly, that I would still be there for them when things improved.
This brings me to the second key point, which is that nothing lasts forever. So, whilst I couldn't say precisely when it would end, the one fundamental certainly of which I could remind them - as we can in the current situation - is that, dreadful as the situation was, it would end.
Lastly, I was able to share with them my confidence, that when it did pass, markets would recover, and that their need for advice and good financial planning would be greater than ever.
Of course that was almost 50 years ago.
But, despite the years that have passed, we can still learn some important lessons which will help us and clients survive the current crisis and prosper when it's over.
The first, and I believe the most fundamental lesson is that, unprecedented and dreadful as the Covid-19 crisis is, it will definitely pass. In the meantime, your role as trusted advisers to your clients is to keep in the closest possible touch with them. We can't pretend to have the answers to the many questions they may want to ask. However, more than anything, else clients will want to know that you are still there for them and, equally importantly, that you will be there for them in the future, when their need for your help and advice is going to be even greater.
The second lesson is even more profound because of the way the very nature of communication has changed beyond all recognition from, 50 years ago, when we were restricted to fixed line telephones. In today's world we can put ourselves ‘virtually' into the homes and offices of clients and sit with them as we communicate and share information in a way which could only have been dreamt of as recently as a decade ago. Indeed, I believe this crisis is going to have a transformational impact on the way we work with, and communicate with, our clients, long after Covid-19 is a distant memory. Certainly, our business and personal lives are never going to be quite the same again.
I believe it is therefore absolutely essential that you use this time of ‘lockdown' to hone your skills and technology. Put yourself in the best possible position to take advantage of the ‘new normal', which will emerge over the coming months. If you doubt this statement, let me give you just two examples from my own recent experience.
In the first instance, I have for many years met up most weeks with a group of a dozen or so friends for a drink and a chat. Unlike me, most of the group are retired, and none of us are what you might call tech savvy, yet within a week of lockdown we had all downloaded the technology that has enabled us to restart our get-togethers - on a virtual basis. In similar vein, a friend of mine who is an avid bridge player is now back playing again on a regular basis, with the same partners as before, using remote technology.
Of course, virtual communication it is not the same as being able to meet personally but make no mistake about it, these behavioural changes are taking place across the length and breadth of the UK, and indeed across the world. The impact, post Covid-19, is going to be nothing short of revolutionary.
The use of virtual technology will advance more in this next few months than it might otherwise have done in the next ten years and, indeed, is already doing so. It is said that during a major war, society changes ten times more rapidly than the normal pace of change.
Despite Covid-19 being an enemy we can neither see nor smell, be in no doubt, we are at war, and living through more profound social changes than we have seen for more than two generations.
That brings us to the third, and possibly the most important, lesson from the 70s, which is that after this crisis has passed, clients are going to have a greater need for our services than ever before. Without exception, you will need to review the financial affairs of every single client. It is therefore critically important for our own businesses, and for our clients, that we embrace the changes in technology which are taking place and position ourselves to take advantage of them.
When this crisis has passed, the technology and skills that we, and our clients, are developing now, will enable us to look after them more effectively, more efficiently and more profitably than ever before. And, if you wish, this same technology will also offer the possibility to significantly increase the number of clients you can deal with on a personal basis, increasing again your productivity and profitability.
It is clear to me that after the dust has settled on Covid-19, there is going to be a huge increase in the demand for financial advice. This demand will come not just from existing clients, but from the many thousands of potential clients who have yet to benefit from professional financial advice.
Will you, indeed will our profession, be able to cope with this enormous increase in demand for our services? If we are prepared to learn the lessons from the past and adopt the technology we and our clients need, I believe the answer will be a resounding yes.
Ken Davy is chairman of The SimplyBiz Group
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