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How has COVID-19 Changed Financial Planning?

Embracing new technology will be key to financial advisory firms' ability to serve their clients securely

COVID-19 has impacted just about every phase of our lives. Financial planning is no exception. Here are some ways the work of a financial adviser and their relationships with their clients have been impacted, and ways in which advisers need to adjust how planning advice and services are delivered.

Retirement Planning

Unfortunately, the economic upheaval from COVID-19 has resulted in a large number of older workers losing their jobs. If this situation is like past recessions, it will take longer for these workers to become reemployed, if they are able to find another job. Even those who do find work may find themselves underemployed and earning less than before.

If this is the situation that any of your clients find themselves in, they will need your help in determining the impact on their plans for retirement, and in making adjustments if needed.

Job Losses, Pay Cuts

One fallout of the pandemic has been a wave of job losses as well as a number of companies cutting their employees’ wages. In the latter case, this often takes the form of a furlough.

Some companies are offering certain employees a buyout package. This might be directed at longer-tenured employees or other groups that the company wants to encourage to leave the company but prefers that they exit without having to lay them off.

Depending upon your client’s situation, this might be a bridge to early retirement for them. If they are too young for retirement, this might be a solid opportunity to either find a new position to continue on their career path, or perhaps do something different. Regardless, they will need your help in both reviewing the buyout offer and in helping them plan their future.

The Face of Financial Planning

The pun in this subhead was fully intended. The trend toward virtual meetings and online advice, such as that from robo-advice platforms and others, was well underway prior to the onslaught of COVID-19. Both clients and advisers have had to adapt to using Zoom Video or other platforms to stay in touch on a face-to-face basis. This is a trend that seems likely to continue even after the effects of the pandemic subside.

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At the very least, this will keep the ability of clients and advisers to work together regardless of their location.

The Role of Technology

Consulting firm Deloitte identified a number of changes that increased in popularity as a result of COVID-19. They feel that the financial planning and wealth management firms that will be the most successful going forward will excel in these areas.

Full digitally enabled client interactions: The trend toward digitization has accelerated in the wake of the pandemic. The next step is for firms to be able to create interactive performance reporting and financial planning tools that provide an equally robust experience for clients either in an in-person setting or virtually. In other words, firms need to ensure that clients are equally satisfied with their experience working with their advisors whether virtually or in-person.

Ensuring that proper controls and security are in place for increased digital and remote workflows: With the likelihood of increased remote work even after the pandemic is behind us, internal controls and security protocols that were administered on-site will likely be managed remotely, at least in part. Many wealth management firms have moved down the path of digitizing these tasks already, the top firms will be the ones that master this technology and are ready for whatever the future holds.

Continued use and refinement of team collaborative software: With the pandemic-driven need for members of the firm’s team to work remotely, the use of collaborative software allowing for the secure sharing of client data and other information has become critical. The continued use and development of these types of applications for firms is vital and will allow firms to hire and retain the best people regardless of location.

Certainly the application and use of these applications will differ a bit based on the nature of the firm and their client base. But the financial advisers and firms that will lead the way into the future are the ones that utilize technology as a tool to enhance the client experience and to make their own internal workflows as seamless and secure as possible, regardless of physical location.

COVID-19 has changed the nature of financial planning in the near term. It has also served to accelerate the rate of change in some areas for both your clients and for the way you run your firm.