Reducing stress and offering social support to clients makes financial advisers invaluable in a crisis according to a new Griffith Business School report.
Researchers interviewed 21 Australian financial advisers at the peak of the first wave of the COVID-19 pandemic in 2020. They found long-term advised clients were better off, felt more informed, panicked less and maintained good long-term financial habits, sometimes even taking advantage of the downturn.
Griffith Business School’s Dr Kirsten MacDonald says the report highlights the unsung role financial advisers play in crisis intervention.
“These professionals are frontline workers and not just during public crises like the pandemic. Clients generally needed more emotional support during a personal crisis,” she said.
“From a marriage breaking up to a death in the family, financial advisers are there when a client’s world falls apart. You can’t discuss money until you deal with the emotions and talk through the hard stuff.”
According to Dr MacDonald financial advisers gave clients the mental space to deal with decisions and reduced their mental load by providing secondary services like liaising with insurance companies or Centrelink.
“They know their clients really well because they’ve been advising them for a long time. These secondary services gave clients the space to grieve and heal,” she said.
“One of the most difficult things for financial advisers during the pandemic was not being allowed to be there in person to comfort their client when they suffered a devastating loss.”
AMP-Griffith University Research Fellow Ellana Loy said another challenge for financial advisers during the pandemic was building new relationships without face-to-face contact.
“While there’s a lot to gain from the communication tools professionals are using to work from home, it was more challenging to build that rapport with new clients.”
She said first-time and returning clients were perceived to be more anxious during the current pandemic and needed more support than long-term clients.”
“It takes time to build a strong client-adviser relationship but it becomes more valuable over time because it reduces stress and increases resilience during a crisis.”
“The level of trust in that relationship plays a role in the application and assimilation of technical knowledge.”
AMP General Manager Advice Solutions, Melinda Huggins said the report shows financial advisers play a key role in supporting the overall health and wellbeing of their clients, particularly during challenging and uncertain periods.
“There’s another side to this role that needs to be acknowledged in terms of the peace of mind provided by professional and trusted advice in times of crisis, which can be transformative for individuals and their families, ” she said.
“By enhancing the training and resources available for financial advisers when it comes to client care, the more effective they will be at giving the support that is needed – our country requires a strong financial advice profession to help more Australians.”
The value of professional financial advice for consumers in a crisis: Experience of financial advisers during the COVID-19 pandemic report is available online.