By Claire Lang, financial planner and owner of Aberdeen-based wealth management company, Lang Wealth Management.
As the country continues to navigate uncertainty fuelled by the prolonged pandemic, the UK’s wealth management sector has seen a notable shift in attitudes towards financial planning. People are, understandably, growing increasingly concerned about their financial resilience – either for their business or household – and many are starting to review their investments, pensions, and retirement plans, often for the first time.
For many people, wealth management is viewed as something that only the wealthy need, which is not the case at all. To me, wealth isn’t about having millions in the bank. It is about having enough to be able to achieve what you want from life’s journey.
No matter what your financial situation, planning your finances and where you want to be will help you to make better financial decisions along the way and can give you a real sense of empowerment.
As Lang Wealth Management steps into its second year of business this month, we are seeing more individuals than ever at all stages in their life and business proactively seeking advice and reassurance on their future funds and investments.
This more proactive attitude towards future wealth planning, particularly with private clients, is something that we anticipate will continue for the remainder of this year; possibly well into next year if the pandemic continues to persist.
With the pace of life slowing under on-going lockdowns and travel restrictions, people suddenly had a lot more time on their hands to review their finances, forcing them to rethink what wealth means, and what is important to them.
The furlough scheme, in particular, has made a lot of people really think about what would happen to them if their income suddenly disappeared or reduced drastically. Many people did not have adequate cash savings in place when the pandemic took hold, and this was a real wake up call.
As a result, we’ve seen a greater uptake in income protection insurance and critical illness cover over the past 12 months, as well as a move to better manage savings. The majority of my clients are now actively saving more each month than they were pre-COVID, and most are trying to maintain at least 3 months of regular monthly expenditure in the bank for a rainy day.
Retirement planning has also started to get some serious focus, as people look ahead and consider what the future might look like. Many of my clients have used their time in lockdown to organise their admin, looking out old pension statements and really considering when, where, and how they will live in retirement. Our clients are now much more proactive about how to make their money work harder for them, than they ever were pre-pandemic.
Whilst the wider economic impact of the pandemic is yet to be fully realised, changes in the financial and insurance landscape in recent months have certainly influenced this more cautious attitude towards future finances.
As the pandemic rippled across the world in early 2020, insurance companies were under pressure to take necessary steps to protect their business, tightening up their terms for pandemic related claims at the first opportunity.
Accident, sickness, and unemployment cover, which are often overlooked, suddenly became the ‘holy grail’ of insurance policies. This has not been available for quite some time now, and I don’t see it coming back any time soon. Planning for that rainy day and being prepared for change is now more important than ever before.
Whilst we can often get stuck in the present during a crisis, and planning ahead feels overwhelming, maybe even futile, taking the time to focus on the future can bring greater peace of mind and help you to prepare for the journey ahead.
Whilst there may still be some turbulence along the way, it’s the destination that is important. Provided that we reach the destination and have a sound plan in place, the turbulence is largely irrelevant, and can always be managed.