Reducing stress and offering social support to clients has made financial advisers invaluable in a crisis, playing an “unsung role”, according to a survey from Griffith Business School.
Researchers interviewed 21 Australian financial advisers at the peak of the first wave of the COVID-19 pandemic in 2020 and found long-term advised clients were better off.
The report, ‘The value of professional financial advice for consumers in a crisis: Experiences of financial advisers during the COVID-19 pandemic’ found these clients felt more informed, panicked less and maintained good long-term financial habits, and in some cases took advantage of the downturn.
Griffith Business School’s Dr Kirsten MacDonald said the report highlighted the “unsung role” financial advisers played 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,” MacDonald 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.”
MacDonald said 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,” MacDonald 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,” Loy said.
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,” Loy said.
“The level of trust in that relationship significantly predicts the application and assimilation of technical knowledge.”
Melinda Huggins, AMP general manager advice solutions, said the report showed financial advisers were a key player in the overall health and wellbeing of their clients.
“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 that can be transformative for individuals and their families,” Huggins 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.”
