Covid-19 experience highlights value of financial advice for UK consumers
According to a survey carried out by Columbia Threadneedle Investments, 36 per cent of investors say the Covid-19 pandemic has made them put more value on professional advice.
Looking at the impact of Covid-19 on consumer finance, the research showed that 17 per cent of investors regretted their previous reluctance to pay for professional advice and 21 per cent regretted not having a proper financial plan.
The nationally representative survey, which interviewed 800 people in the UK, including 263 investors, delved into how Covid-19 had changed consumers’ attitudes to their finances.
The research also found that 57 per cent of investors were concerned about the long-term impact of Covid-19 on their investment funds 46 per cent of investors were concerned about the long-term impact of the pandemic on their future retirement income.
The group to fear the most adverse effects was those aged 45 to 64, with 60 per cent of 45 to 54-year-olds and 56 per cent of 55 to 64-year-olds expecting that Covid-19 will make them worse off in terms of long-term financial wealth and well-being.
Investors believe they may think about their finances differently as a result of the crisis - with a third wanting to be more diversified, 45 per cent becoming more risk averse and 54 per cent identifying new investment opportunities. However, 36 per cent felt that the crisis has made them more inclined to favour cash. A third of investors say they are now keener to invest in carbon free stocks, reflecting a shift in values.
Alastair Caw, Head of UK Wholesale Distribution at Columbia Threadneedle Investments, says: “It is clear that, at a time of financial and emotional stress, the value of good independent financial advice comes to the fore. The ‘squeezed middle’, those aged 45 to 64, feel that the crisis will make them worse off in the longer term, likely a result of their nest eggs having less time to recover in advance of retirement.
“It’s concerning that more than a third of investors are now more inclined to favour cash but is understandable given recent market upheavals have put more focus on risks. History has shown that over the long term, a well-diversified portfolio of financial assets is more likely to generate returns compared to cash.
“The pandemic is causing investors to rethink their previous financial planning arrangements, recognising new investment opportunities alongside the benefits of diversification. They will need professional advice to do this well.
“Investors are clearly now placing more value on guidance and advice to make the right decisions, giving confidence in their long-term financial planning arrangements.”