Future uncertainty: What are clients asking?

By Jayson Forrest - Managing Editor  - IMAP Perspectives

As the nation battles on with the COVID-19 pandemic, what are clients asking their advisers? Speaking at the IMAP Adviser Roadshow, Steve Aldridge AFP^® and Vincent O’Neill AFP^® share their insights on what clients are telling them and how their businesses are responding.

Q: What has been the focus of your engagement with clients and what are the main areas they are wanting you to address?

Steve Aldridge: Our main engagement with clients in recent times has been dealing with the fear, on the health side of the coronavirus, and what that means for them and their family. And for business clients, it’s been about how to manage their business going forward through this crisis.

And while there has been an impact on investment portfolios as a result of COVID-19, which we talk through with our clients, it’s not really the main thing they want to talk about. Their main concern is how they are going to get their groceries and manage their day-to-day living under the Government’s social lockdown policy.

Having long relationships with our clients, we’re a good point of contact for them to talk through those issues and help them navigate a path through these uncertain times, because some of our clients feel quite alone.

Vincent O’Neill: In terms of the financial aspect of COVID-19, there is a lot of symmetry to past crises, where clients become focused around their cashflow needs for the months ahead and harbour fears about potential losses to their portfolio that might yet happen. We find that the fear of potential future losses far exceed some of the emotional reaction to what has already happened.

But we are also dealing with a human crisis right now. You’ve got grandparents separated from grandchildren, and they are unable to play their usual role as the family babysitter. That’s hitting people quite hard.

And we’re seeing more parents bankrolling their children during these uncertain times. Parents are often the lender of first resort, and most want to help their children where they can. So, our job as their adviser is to help them through their cashflow needs of how they do that, while not too heavily disrupting their own long-term financial plans. 

Q: Advisers have helped their clients through other global crises, like the GFC. What’s different this time around that is impacting your clients?

Steve Aldridge: With the GFC, many clients blamed the finance industry, but this time it seems to be quite different. Because this is largely a health crisis, there is a feeling that we’re all in this together. Clients are actually asking me how I am going, how my family is going, and how my staff is going. For this crisis, we’re alongside our clients, sharing the same concerns and impositions through this journey together.

So, while there is still the financial planning component of what we do with our clients, like investments, allocations and portfolio changes, there is also the human element of helping our clients navigate a new online environment for the first time.

This includes helping clients use video conferencing tools, like Zoom. These types of tools are very important to clients in times of crises. When they take a step back and ask themselves what really matters - the fact that their portfolio might be down 10 per cent or the fact they want to connect with their grandchildren - connecting with their grandchildren always comes out on top.

Vincent O’Neill: Clients are interested in how COVID-19 is impacting them and their family. People are all going through the same situation, so in this sense, we’re all in this together and hopefully, we’ll get out the other side sooner rather than later.

From a business owner/manager perspective, there is a business continuity planning element to this as well. We are very keen to get on the front foot and explain to clients that even though we currently have heavy restrictions around our ability to access the office or only operate selective elements of our business, nonetheless, it’s still business as usual. These days, we’re operating from the Cloud via our virtual offices at home, and clients are understanding of that.

However, when it came to online meetings, most clients were outside their comfort zone. But when they used Zoom for the first time, they liked the experience. So, if there are positives to come from all this disruption, it’s the fact that clients are rapidly upskilling their own use of technology.

Q: The way in which advisers are now working with clients through this period of disruption is likely to have a lasting impact on how advice businesses will operate moving forward. Do you agree?

Steve Aldridge: There are certain technology solutions that we have started to use, like DocuSign and Zoom meetings, which is also forcing the uptake of this technology by other businesses and clients. And by using technology and platforms, rules around ‘know your client’ is enabling us to bring on board new clients who we haven’t even met face-to-face. So, that’s been positive. Technology is having an enormous impact on our business and I can’t ever see us going back to the way things were done only a few months ago.

Vincent O’Neill: A big focus of our industry in the past has been around the annual client review meeting, which required a lot of work by advisers. But because things have been so disrupted from a markets’ perspective, what we’ve found is that we are doing more regular updates with our clients.

So, we’re doing a lot more ad-hoc meetings or catch-ups with clients, which can be organised at relatively short notice over the phone or via Zoom, to discuss specific issues with them. Clients have responded well to these types of meetings.

Even for some of our advisers, who have been on-boarding new clients, where they would usually have one or two meetings to cover off as many items as possible, they are now having five to 15-minute meetings to cover off on a specific topic, before moving on with the on-boarding process. And rather than clients having to battle traffic to come into our office, it’s simply a matter of hopping onto a call or video conference quickly, to resolve the issue and move on.

I definitely think when we come out the other side of COVID-19, there will be a much more flexible approach to client meetings, and I think everybody will be more comfortable doing these smaller, more casual meetings to cover specific issues. And while the physical meetings will still be important, perhaps at least once a year, moving forward, we can expect to see a combination of different meeting formats.  

Q: How are you implementing investment decisions, and how does this current disrupted period differ from what you’ve experienced in the past?

Steve Aldridge: I worked with managed accounts in the business through the GFC. I can’t imagine not having that type of solution in the business. Having asset consultants engaged who are across the different allocations, and to proactively make the investment decisions and implement them straightaway, is incredibly efficient for the business. It means that as advisers, we can spend more time effectively communicating to clients in a timely manner, including explaining what has been done with their portfolios and why it has been done. 

Clients are paying us to look after their money and make decisions on their behalf. That’s what clients expect from advisers, and when they are paying you for a service, they expect their portfolio to be actively managed, and not managed every six or 12 months.

Agreeing on a mandate with the client and then acting on that mandate, is what clients want. So, you need a framework around your investment offering, like managed accounts, to enable you to do that.

Vincent O’Neill: As a business, we weren’t fortunate to be operating under a discretionary environment back during the GFC. At the time, there was a period where we had a number of assets we wanted to switch. But the process involved in writing to all our clients explaining our recommendations and then chasing up clients over the phone for authorisation, meant that the changes we wanted to make in a timely fashion, weren’t being made. This meant it was a poor client experience and outcome for clients.

This experience was one of the main drivers that encouraged our business to adopt a managed accounts solution.

Implementing a managed accounts solution within our business has allowed us to focus more on the client communication aspect of what we do. So, rather than focusing on the compliance and administration, we can spend more time focusing on communicating to our clients about their investments. Providing a managed accounts solution has enabled us to be more proactive and regular with our client communication, and that’s something that our clients value.

Q: As a business, what has the COVID-19 crisis taught you and what will you be changing as a result of it?

Steve Aldridge: We’ve been doing a lot more online interaction with clients during the coronavirus pandemic. The fact that clients have so readily embraced this online interaction will change the way we do business going forward.

I think advisers and advice businesses will increasingly embrace online interaction with clients, allowing for more regular but shorter client meetings, because I think the days of having just one annual client review meeting are gone. Clients want to interact more often with their adviser than just once a year.

Vincent O’Neill: I think we’re currently seeing the evolution of client interaction. I think the one positive to come out of the COVID-19 crisis has been client meetings. We were keen to evolve our approach to client meetings but clients were largely very comfortable with the traditional way of doing things.

However, self-isolation and social distancing has shaken clients out of that mindset. They have been forced to upskill and try different things online. And for most clients, they actually like online meetings.

So, in the new world post COVID-19, advisers are going to have to be more creative in how they run their client meetings. Rather than it being the once or twice a year formal meeting in the office, clients can expect to have shorter, more regular meetings that are on specific topics.

And while there still may be the formal annual review, advisers will become increasingly more flexible about what they can do with these regular and shorter client meetings, which will improve the overall client experience.

Q: How are you handling the client fear aspect of COVID-19?

Vincent O’Neill: Our approach is to be thorough and regular in our communication to clients. We don’t pretend to know exactly how this pandemic will play out, particularly on markets, but we have shared with clients that we are taking a conservative approach at this early stage.

We continue to be in regular communication with clients as things change, including keeping them up-to-date with how things are progressing in terms of their portfolios. 

Steve Aldridge: Where I am seeing a lot of fear and uncertainty is with business clients, who are often medical and dental professionals. There has been a lot of uncertainty about when they can resume elective surgery or practise dentistry again, so it’s good to see the Government beginning to lift restrictions on them.

However, that’s where a lot of fear and uncertainty in client conversations is coming from. So, as an adviser, it’s a matter of talking through their concerns with them, so they know they’re not alone during this crisis. It’s also about taking them through things that they may not have thought about, like accessing the Government’s support package.

In terms of portfolios, we continue to actively communicate to clients. There is still likely to be more pain in the markets ahead, but clients understand this.

Vincent O’Neill: A fundamental part of being an adviser is managing client expectations. And that helps clients psychologically deal with what’s to come. By communicating to clients now and explaining how you’re going to help them get through this crisis, like managing their cashflow, advisers can help their clients not make emotional decisions, which are often bad decisions made at the worst possible time.

Steve Aldridge AFP® is Director at Ridgeman Private Wealth. Vincent O’Neill AFP® is Director of Private Wealth at Stanford Brown.