So, if a client decides that traditional savings methods are preferable, advisers and wealth managers should ensure that their clients understand the various savings accounts available to them before making a decision.
That said, for clients with a stronger appetite for risk, another potential route would be to invest in shares, or stocks and shares Isas, as these options can be good alternatives in order to hedge against inflation.
As companies will have the potential to grow their profits broadly in line with inflation, individuals will therefore have the potential to make stronger returns on their investment.
However, even if a client has the capacity to invest their funds this way, advisers should ensure that clients are well aware that share prices can be volatile.
Indeed, some assets can be adversely affected by higher inflation - for example, retailers who find that their margins come under pressure when the prices of wholesale goods rise.
Whatever the case, this can be a risky investment tactic for clients – particularly if they have longer-term savings goals in mind.
After all, the approach of investing in riskier assets to compensate for lower interest rates will not always pay off, and individuals might find themselves worse off should an investment perform poorly.
The reintroduction of lockdown measures, for example, could mean that clients see their riskier investments go awry, so this should be a point of consideration if individuals need to invest with the promise of sure-fire returns.
Looking to the future
Advisers will know all too well that there are never any guarantees as far as interest rates and inflation outlooks are concerned. However, after long speculation that interest rates would turn negative, this no longer seems to be the case.
Indeed, a recent Reuters poll in January found that the majority of economists expected the central Bank to keep rates steady at its record-low 0.1 per cent until at least 2024.
Consequently, investors and clients alike might plan ahead with the prospect that interest rates could remain low for quite some time.
Speaking more broadly, there has been more positive news in terms of the wider economic outlook, with unemployment rates revised down in recent weeks.
Commentators are forecasting the British economy is set to grow at the fastest rate since the Second World War this year, should a consumer spending boom occur as further lockdown measures are relaxed.
Put simply, while some short-term adaptations might well be necessary at the moment and it is vital to manage clients’ expectations, advisers should steer individuals away from making any drastic changes to their long-term financial strategy.
Given that markets will eventually stabilise, savers should avoid exposing themselves to any unnecessary financial risks.
