Advice businesses under pressure 'on two fronts'

Advice businesses will feel the impact of the coronavirus-induced downturn to different extents depending on the age and stage of their business, Financial Advice New Zealand chief executive Katrina Shanks says.

Wednesday, March 25th 2020, 6:36AM

The Government has released a $12.1 billion economic stimulus package, including tax changes and wage subsidies, as well as a loan scheme for businesses.

Shanks said adviser businesses, many of which were small, were dealing with pressure from multiple angles.

Many were conducting a “trade of grief” with clients as some dealt with their first experience of a rapidly falling market.

They were handling more client questions, she said, while also facing the prospect that work that was “in the pipeline” would not come off because of clients’ uncertainty.

Those who were established would be able to navigate the downturn more easily than those who were still in the start-up phase. “If you have got clients who are going to let go of their insurances because they’re seen as disposable in tough times, that gets tough … there’s a lot of volatility in the industry in revenue streams going forward.”

Financial Services Council chief executive Richard Klipin said advisers had a critical role to play in the Covid-19 crisis.

"The message is we're all in this together in incredibly tough times."

He said it would be important to get through as a sector, for clients and for the resilience of New Zealand.

Financial Advice NZ has had to take the decision to postpone its conference to February because it could not risk the investment in an event that might not be able to happen.

The conference made $567,429 in 2018, according to the association’s most recent financial report. It cost $477,217 to deliver.

“It’s such a huge financial undertaking for us to put on such a large conference, we needed certainty upfront to fund it on that scale.”

She said it was not the right time to be asking people to support and sponsor the conference.

“We don’t know what the world will look like in October so we made the tough decision to postpone until February – no one knows what February will look like but it’s further away than October.”

She said the association was also providing regular updates for advisers across all advice streams on what they should expect and be thinking about in light of coronavirus.

Tags: Covid-19 Financial Advice New Zealand