Figures out this week revealed that UK unemployment has surged to its highest level in over three years as the pandemic continues to hit the economy and is expected to rise sharply in coming months.
Gemma Harle, managing director of Quilter Financial Planning, told Financial Planning Today that Financial Planners can prove their worth by prioritising speaking to clients that work in the most impacted sectors to reassure them their finances are in safe hands as unemployment continues to rise.
Ms Harle said that Financial Planners may find that they are busier than ever.
She told Financial Planning Today: “For advice businesses themselves it’s hard to say what the impact will be. They may find themselves busier than ever as people have continually changing circumstances which require them to take into account. Some people who have been made unemployed may seek financial advice to better understand where they are at with their finances so they may in fact have new clients.”
She told Financial Planning Today: “Unemployment can be an immensely challenging period emotionally and financially. Financial Planners are likely to be one of the first ports of calls if someone has been made unemployed and they have an adviser.
“What the client needs at that point in time is reassurance and a financial plan so they can feel financially secure during the period. It is useful to have a run through of their current financial plan and if they are still on track or things need to change. For instance, a client at retirement age but wans to continue working and is now unemployed may decide that they want to take retirement for the time being. For another it may be they need to use their rainy day savings and cut back on expenses.
“It’s important to regularly check in with clients that have been made unemployed, particularly if they seem particularly stressed. Advisers may want to prioritise speaking to clients that work in the most impacted sectors, such as hospitality.”
The unemployment picture differs hugely across the regions, with some areas of the UK actually seeing a rise in employment, analysis by Financial Planning Today found.
The unemployment rate jumped by 1.4% to 6.6% in the North East, while the rate dipped in the West Midlands, by 0.4% to 4.6%. Northern Ireland has the lowest rate overall at 3.7%, though this is up 1.2% on the previous quarter.
With Covid-19 restrictions becoming increasingly localised under the new three-tier system announced by the Government yesterday, economic impact across the UK will vary.
Older people continue to be hit hard by the pandemic. Nearly one in 10 workers aged over 65 have stopped working since the Coronavirus pandemic lockdown began. It is the biggest fall for any age group so far this year except those aged 16 to 17.
Stephen Lowe, group communications director at Just Group, said the drop means Financial Planners need to make sure they engage with clients in this age group.
He said: “Advisers have a crucial role to play in helping clients understand their options and find some security and confidence when facing what may well be unexpected circumstances.
“The State Pension Age reached 66 this month but it seems the Covid-19 effect has been to reverse the increase in the number of people working later in life. It appears that the policy of encouraging people to work later in life may be among the casualties of Coronavirus for some time to come.”
Nationwide unemployment figures are expected to rise further after the furlough scheme is replaced by the less generous wage support package next month.
Derrick Dunne, CEO at discretionary fund manager Beaufort Investment, said his firm expect the unemployment rate to shortly hit the 8% highs last seen in 2012.
AJ Bell also expressed concerns that things will get worse before they get better and we will see large tax rises in 2021 to pay for the cost of the government response. Laith Khalaf, financial analyst at AJ Bell, forecast tax rises in 2021.