The economic and business impact of the Covid-19 pandemic since last March has been significant. In many cases, the worst is yet to come, with no definitive end date in mind and forecasts of peak unemployment by the middle of the year.
The Office for Budget Responsibility thinks it will take until the end of 2022 before the UK economy recovers to its pre-pandemic size.
And that’s before we factor in any short-term economic headwinds created by Brexit, albeit with a fairly satisfactory trade deal now in place.For Financial Planners and their businesses, the pandemic has been disruptive.
Adjusting to working from home and meeting with clients over the telephone or on Zoom is a world away from the learnt experience of office working and friendly face-to-face chats.
On the plus side, the investment markets kindly avoided adding stress to the situation, with a pleasing rise in the value of global equity markets last year.
Demand for what we do is not diminishing either, with a growing number of wealthy post-war baby boomers reaching retirement age, desperately in need of advice.
Amid all this, the publication of the Coronavirus financial resilience data from the Financial Conduct Authority this week still makes for rather grim reading. At a headline level, they warn that a ‘significant’ number of firms in the retail investments sector could fail this year.
According to their survey responses, 4,000 businesses could go to the wall by the end of this year, including a number of Financial Planners.
With the financial adviser respondents to the survey bundled up with other types of businesses, it’s hard to know how many of these anticipated business failures will include our peers. But even one business failure is too many when we consider the consequences for family, staff and clients.
As well as the direct financial implications of a business failure, the FCA is rightly concerned about the risk of potential harm to consumers.
There is already a lack of capacity within the Financial Planning profession, which means the loss of business competition this year would further push up advice costs; right at a time when the regulator and media commentators claim the price of advice needs to fall.
Throughout the pandemic, our mental health has been tested by such dramatic changes to daily life, including the inability to have close contact with family and friends, and a feeling of isolation when working from home.
Business financial concerns will undoubtedly add to these mental health challenges. We are a community within the Financial Planning profession.
Our inability to get together in the usual forums of conferences and seminars should not prevent us from reaching out to peers and offering what support we can to each other during these extraordinary times.