Unfortunately, this could lead to individuals making panicked financial decisions.
Reassuring clients
Given the current economic circumstances, many savers will naturally be apprehensive about the health of their savings, as well as their ability to plan for the future.
Throughout the pandemic, this stress has naturally led to some savers resorting to ill-advised, short-term decision-making.
Back in July, research showed that one in five investors felt more inclined to sell their investments in light of market volatility, with 16 per cent having or expecting to use funds from the sale of these investments to support themselves throughout the pandemic.
Likewise, many Britons are panicking about their supposed safer savings options. Indeed, the aforementioned study from NerdWallet also found that almost two fifths (38 per cent) of people had been saving less since base rates fell to 0.1 per cent.
Meanwhile, almost half (47 per cent) said that they would withdraw some or all of their money from their savings accounts if rates fell into negative territory.
As such, IFAs and wealth managers should reassure their clients that there are still options available to make their money work relatively hard, given the circumstances.
For financial advisers, the Covid-19 crisis has ultimately prompted an all-hands-on-deck response. To provide their clients with added reassurance about clients’ long-term financial prospects, many IFAs have been managing their clients’ investments more proactively.
This should remain the case – wealth managers and financial advisers should regularly touch base with their clients to gauge their feelings about the markets, as well as any potential changes to their current employment and income situations.
In this way, advisers will be able to guarantee that their clients are receiving up-to-date advice about their financial situation.
Outlining different options
In the current climate, the key to encouraging more informed decision-making among clients should be ensuring that advisers cover all possible options during the financial planning process.
For instance, while traditional savings accounts may not appear to be the most palatable option at face value, it would be unwise to dismiss them entirely.
Indeed, in such a volatile economic climate, some savers may be better suited to a more conservative savings strategy, given that they offer the potential for reliable (if modest) returns.
Advisers should therefore make their clients aware of accounts still offering relatively generous returns. At the moment, some banks are still offering up to 0.6 per cent interest for savers looking to invest their cash instant access savings accounts.
Meanwhile, some fixed access accounts are offering up to 1.25 per cent, making this a viable option to boost their savings.
