Consumers engulfed in coronavirus ‘circle of fear’ turn to depleted & wounded ranks of planners for help

As the flattening of the corona virus curve slowly inches downwards and a glimmer of hope appears on the horizon, it’s appropriate to reflect on the myriad of issues and lessons derived so far from the pandemic, in particular the lack of recognition that is afforded to the role of financial planners. 

With the ranks mercilessly depleted by two decades of unprecedented reforms – and many wounded financially and/or battling deep mental health issues, it’s been the planners that have stoically been at the front line helping consumers and clients engulfed by fear. 

Fear that literally erupted as the enormity of the coronavirus pandemic engulfed the nation resulting in consumer confidence being smashed to the lowest on record according to Westpac’s recently released survey, by the resultant share and property market downturns. 

Savings, jobs, businesses, retirement plans and property values were washed away as the tsunami of economic terror and realisation grew in intensity that evolved into a ‘Circle of Fear’ that overwhelmed the populace from young to old. 

Fear of contracting the virus or dying from infection was soon compounded by fear of being unemployed and resultant financial hardship.  Fear of losing the family home; fear of falling living standards; fear of isolation and loneliness at home for months; fear of being detached from family and friends; fear of not finding employment or able to reopen once viable businesses; fear by children that an embrace could kill an elderly grandparent or relative!

From the onset of the coronavirus, planners have quite literally been inundated with an unprecedented volume of calls from clients and consumers as they dealt with both the emotional and financial consequences of unemployment and lost value of investments and savings.

However, cost has made access to affordable financial advice prohibitive and out of reach of the very Australians most greatly affected.  To assist clients and consumers, many planners and their businesses are wearing many of the charges.  In fact, I know a number of very dedicated individuals that have been working for less than $10 per hour before this pandemic!

In addition, planners who normally work long days, have been asked to double their efforts working even longer days, and through weekends in order to deal with the increased volume of calls and enquiries.   

The folly of the regulators two-decade approach to unrelenting reform that believed there was a ‘one size fits all’ solution has been exposed.  The fallacy that more scrutiny, administration and compliance would herald a ‘new golden age’ of advice has only served to hasten the demise of the sector that culminated with the Hayne Royal Commission that proved even the institutions with all their resources and funds could not comply.

Above all, the coronavirus has been the ‘black swan’ event that has revealed the gaps and monumental shortcomings of the current financial service system.  At a time when professional financial advice has never been more important or needed by so many Australian consumers in desperate need, it is unaffordable and worse, there simply aren’t enough practitioners.

Yet another ‘black swan’ is the concern about liquidity and ability of superannuation funds to handle in excess of 700,000 applications for earlier release.  Had there been more planners, they could have provided much needed advice and support that would have been of immeasurable value to both the members and super funds.

If this perfect storm couldn’t get any worse, a recent industry survey predicted 2020 would see a record number of practitioners exit the industry fatigued by two decades of structural reform, the value of practices plummeting and prospects of even more reform to come.  Exhausted and many battling significant mental health distress, is it any wonder that capable planners have had enough and are choosing retirement.

The coronavirus pandemic and resultant ‘black swan’ events have provided regulators, industry and stakeholders an opportunity to pause, reflect and take stock of what has occurred and the lessons contained therein.

I note with interest the manner in which a great portion of our politicians are acknowledging new insights on previously long held views, and even mistakes that have been made in past years in other key industries.  Decisions that have been proven under the litmus test of a ‘black swan’ event, which shows favour to none, to be detrimental to the interests and wellbeing of the nation. 

While time is still on our side, I call on the federal government to undertake a review of financial services looking through the lens of a perfectly imperfect world.  To back test the real impact of reform that has failed so appalling when it was needed most in the context of ensuring a strong viable financial services industry and affordable advice is available to all Australians.

Finally, to take steps immediately to limit the risk of losing more professional planners from the ranks of an industry that needs them so desperately at this time of need and in the future.

ENDS

Issued by Barry J Daniels               

Media enquiries       Mr. Joe Perri, Joe Perri & Associates Pty Ltd

Mob:  +61 412 112 545  Email:  jperri@joeperri.com.au