The world looks very different from the one we were operating in just a month ago. The effects of COVID-19 are running deep – both economically and physically. We’ve seen it already start to transform the advisory business. With that, we’re launching a new weekly wrap to keep everyone up-to-date of what we’re seeing in the sector, including latest news and must-reads. .
So, here we go:
1. The AFR’s wealth editor Aleks Vickovich published a stellar long-form piece looking at how advisors are moving their businesses online but are still drawing in compliance with one advisor saying “change is coming, whether government-instigated or not.” This transition is happening at a time when the corporate regulator has acknowledged a growing and worrying advice gap where there’s a diminishing supply of advisors. “More than 4000 advisers abandoned their authorisation in 2019, representing a 15 per cent reduction in the total workforce.” – You can read more here.
2. This is opening up a once in a generation opportunity for advisors – Demand for solid advice is unprecedented. With record low interest rates affecting investors, record household debt, an increasingly complex tax system to navigate and continued changes to superannuation it’s no surprise household financial stress is at an all-time high. Basically, more households need help than ever before. On the supply side, the number of advisers is shrinking fast. So, history tells us when you have a market with high demand but shrinking supply it is one of those once in a generation opportunities most only realise with hindsight. Firms providing clients with a clear strategy and peace of mind rather than just pushing a product will win. We live in a world where it’s not the big that eats the small but the fast that eats the slow. And there are some amazing client-centric boutique firms that are moving fast. These firms have historically believed in delivering advice with a fundamental focus on acting in the client’s best interest so the Royal Commission has had little impact on their approach. In fact, it has validated their business model rather than caused disruption. The result has been increasing referrals from existing clients and record growth.
3. Investors are more spooked by COVID-19 than the GFC. We’re in unknown territory right now – consumer confidence has fallen through the floor. But, data suggests Australians are flooding back into the sharemarket – largely buying undervalued blue-chips or betting on whether companies will hit it big or drown during these uncertain times. More in Jack Derwin’s piece on Business Insider.
4. Working with small business clients? MYOB has put together an awesome business preparedness guide here. It covers off everything small business owners need to navigate the COVID-19 crisis.
5. Hundreds of thousands of Aussies interested in early super access. With Roy Morgan suggesting the real unemployment rate is at 16.8%, many Aussies are struggling. The ATO released stats showing many are considering accessing their super with 361,000 registrations of interests made to the tax office. Early access to super isn’t available until April 20 and there have been plenty of advisors warning their clients against taking out the funds which is about $20,000 over two years. Funds that could be worth over $150k in 30 years time. More on why accessing your super early could be a bad idea in the long run here.
That’s it for this week. Stay safe, and stay home.
The myprosperity team
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