A common refrain from advisers to clients is to “dial down the noise”. And, like most conventional wisdom, it holds an element of truth.
We know that for a long-term financial plan to succeed, clients must maintain their course and avoid getting distracted or disheartened from inevitable setbacks along the way.
However, in recent years, dialing down the ’noise’ is easier said than done. When I first started at Coutts a decade ago, it was commonplace to deliver a market update to clients once a quarter and that was typically sufficient to inform and reassure.
Negative headlines week after week might understandably lead you to conclude the financial world was in crisis
Today, consumers face a barrage of headlines about financial matters 24/7. The volume and frequency of market noise have risen significantly and while I firmly believe that knowledge is power, without help and support to filter, it can be distracting, overwhelming and even detrimental to clients’ financial plans and their financial confidence overall.
Last year exemplified this issue in many ways. Headlines throughout the year speculated about an impending recession, the impact of geopolitical factors, inflationary pressures, interest-rate hikes, etc, etc.
Reading these week after week might understandably lead you to conclude that the financial world was in crisis. Yet, on the whole, global markets had a stellar year and UK savers enjoyed the highest cash interest rates in over a decade.
I can’t help but wonder how many were influenced by the news agenda
That said, only investing, rather than cash savings, would have kept pace with inflation throughout 2023. In fact, it will come as no surprise that over the last five years, which has included a pandemic, a cost-of-living crisis and war in Europe, stock prices have soared, with the S&P 500 rising over 20% in 2023 alone.
Now consider that during the last year, global investors put a record $1.3trn into cash in 2023 while equity funds suffered net outflows across the year.
For some, this may have been a sensible, considered decision, but I can’t help but wonder how many were influenced by the news agenda and made a short-term decision that could result in reduced financial returns over the longer term.
Because at times like this, when there is so much uncertainty, the value of advice is undeniable. However, it regrettably remains a privilege afforded to a select few, with less than 8% of the population accessing advice in the last two years.
The ability to make informed financial decisions shouldn’t be a luxury – it’s a fundamental right that must be extended to every consumer
I’ve always felt that one of the greatest benefits to be gained from working in the financial-services industry is the impact it can have on your own finances. Our friends and family often benefit also, simply by being available to them to answer their questions.
Yet, I think we’ll all agree this shouldn’t be limited to those who can afford to pay for advice or who know an adviser. The ability to make informed financial decisions shouldn’t be a luxury – it’s a fundamental right that must be extended to every consumer.
That is why the upcoming Advice Guidance Boundary Review (AGBR) is so important for British consumers, society and the industry as a whole. When we are young, our financial lives are typically quite simple, but without pointers in the right direction, financial opportunities can be missed and mistakes can be made that can limit one’s opportunity in life.
Let’s seriously reflect on the ramifications of excluding millions from access to any meaningful financial education in life
As we get older, life tends to get more complicated and so if we can guide and support people in the best way possible during the early stages in life, they will better understand the benefit of advice when they come to need it most. And inevitably, more people will be better able to afford it having received better support with financial matters earlier in life.
Yes, there are valid concerns to be worked through regarding “targeted support” and the associated risks of broadening financial guidance, but let’s also seriously reflect on the ramifications of excluding millions from access to any meaningful financial education in life. It’s a story of missed opportunities and untapped potential spanning many generations of Britons.
As an industry, we must now candidly address the enormity of the issue at hand. The AGBR represents a pivotal moment where we collectively have the opportunity to revolutionise how the British public is supported in navigating the complexities of personal finances, filtering the streams of information available to them and making financial decisions with greater confidence.
Brian Byrnes is head of personal finance at Moneybox
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