Openwork: One in eight clients have suffered financial damage from COVID
Financial advisers believe around one in eight (12%) of their clients have suffered financial damage from the COVID-19 pandemic, new research from The Openwork Partnership has revealed.
Its nationwide study found that advisers on average believe 12% of their clients have taken a financial hit because of the impact of the pandemic with just 8% of advisers having said that none of their clients have been adversely impacted.
The biggest issue advisers have seen is clients stopping saving or investing during the pandemic – 48% of advisers say they have clients who have done that – while 32% say they have clients who have run down savings during the pandemic.
Worryingly 19% of advisers say they have clients who have taken money out of pension funds to tide them over during the crisis while 31% of advisers say they have clients who have taken tax-free lump sums from pensions earlier than planned.
HMRC data shows around 1.778 million people have withdrawn £12.04bn in flexible payments from pensions between January 1sts 2020 and March 31st, 2021, during the pandemic with average withdrawals in the first three months of this year at around £6,800, slightly down on the same period in 2020.
It’s not just pensions, The Openwork Partnership study shows. Around 27% of advisers say clients have sold investments while 5% say clients have sold buy-to-lets and 4% say clients have downsized to smaller homes.
Around 41% of advisers say they have seen a rise in clients taking money out of investments to help themselves or family members.
Mike Morrow, chief commercial officer at The Openwork Partnership, said: “Its been a tough year financially for millions of people despite unprecedented levels of Government help and advisers are seeing the impact on the ground.
“Of course, many people have benefited financially during the crisis with more money going into savings but one in eight clients on average suffering losses is bad news and particularly so when people are taking money out of long-term investments to keep going in the short-term.
“The value of financial advice and financial advisers will be very important as the UK starts to recover from the financial impact of the crisis, demonstrating how vital advice is and the role it plays in what are very personal situations.”
The Openwork Partnership has more than 4,300 financial advisers across the UK and operates as a directly authorised, multi-panel distribution network. Its new website includes an interactive map enabling more clients to access support from the network.