Financial Planning

More adviser communication required

financial advisers communication

Financial advisers should be ramping up their communication with clients and reassessing portfolios during this time of economic uncertainty.

Financial advisers should “overcommunicate” with their clients in order to reassure them during the economic uncertainty caused by the COVID-19 pandemic, a senior advice executive has said.

Centrepoint Alliance advice services and solutions group executive Kate Anderson said: “Advisers have an important role to play during this time to guide clients through important and possibly life-changing decisions about their investments, superannuation and pensions.

“We have seen markets tumble before, but they will bounce back and that is an important message, particularly for those who are still accumulating. For clients who are transitioning to retirement, they are the ones who more than ever will need to speak to a professional about their income requirements.”

Centrepoint Alliance head of research Miriam Herold encouraged financial advisers to also reassess portfolios during this time and focus on relevant investment time horizons for their clients.

“There is no one-size-fits-all approach to dealing with the fear and loss aversion which is likely to be triggered in some clients by recent market turmoil and the developing pandemic,” Herold said.

“It is at times like these that advisers can really add value by helping a client to understand their individual time horizon and financial requirements.

“The worst thing a client can do after a large equity market fall is to lock in losses by selling their equity exposure if they don’t require the assets to fund their living expenses.”

In addition, she highlighted the importance of constructing well-diversified portfolios to help clients weather the ongoing market volatility.

“The importance of diversification across asset classes cannot be emphasised enough,” she said.

“It is extremely difficult to time the market and taking this type of action may cost portfolios dearly over the long run. Instead of attempting to make tactical changes, we recommend including allocations to strategies with a specific focus on downside protection and capital preservation.”

Anderson added all advice businesses should test their ability to work remotely to ensure they are equipped to support clients effectively as social distancing becomes the norm.

“This is an opportune time to demonstrate to clients the value of advice and confirm your commitment to remain open for business, just in a different way,” she said.

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