Clients are more focused on outcomes than returns in post-Covid 19 era

Rebecca Tomes
September 29, 2021
(IFA Magazine)


By Steve Hunter, Head of Marketing and Distribution at Momentum UK

The Covid-19 pandemic is in some respects a significant life event for many of the population. And like most life events it prompts people to examine parts of their lives, including their finances, and financial objectives.

So, it is unsurprising that consumer demand for financial advice rose during the pandemic as people reviewed and continue to review their current financial arrangements, whether in retirement, or approaching it. In turn, advisers have seen the majority (85%) of their clients’ risk profiles change during and post the initial pandemic lockdown, with many advised clients adopting a more cautious approach in the period following.

This shift in approach from clients, has led to a rather significant breakthrough in the retail investment world, and this is that consistency of outcomes has emerged as the primary requirement in the post-Covid-19 environment. Research, independently commissioned by Momentum Global Investment Management (“MGIM”), shows over a third (36%) of advisers believe their client’s satisfaction with them is increasingly tied to the ability to deliver the client’s expected investment outcome.

An important part of delivering expected outcomes, is mitigating risk exposure, and this was also high on the priority list in adviser’s fiduciary duties to their clients, with nearly a third (30%) citing the importance of their fund choices ‘preserving portfolio value and income throughout retirement years’.

High returns, typically the leading requirement for investors, and the advisers who select funds on their behalf, remains an important objective for advised clients (30%), but post-pandemic, now appears to rank behind achieving the expected investment outcome.

The source of higher returns often comes from riskier, higher volatility funds. However, such is the momentum toward achieving expected investment outcomes, that exposure to sustainable, ESG-integrated funds (22%), were more popular than the aforementioned higher volatility (21%) funds with regards to making clients happy.

Maybe there is some disillusionment with chasing after the biggest return (and the volatility risk it brings), so we have seen a natural shift from advisers towards multi-asset strategies with the broader diversification and lower volatility this brings as a core solution in managing and delivering on specific outcomes aligned to client needs.

What this means for the nature of regulated advice today

The rhetoric around the decline of Advisers pre-Covid couldn’t have been more misdirected. Financial Advisers were being kept busy. The research shows they feel more valued than ever by clients following the pandemic lockdown.

Encouragingly, the value of good financial advice appears to have increased significantly among those we surveyed. Quality, sound advice at a juncture like this, both socially and economically, cannot come fast enough, and savers and retirees alike appear well engaged with their Advisers. This bodes well, as it’s likely the impact of this crisis will certainly last for many years, with the continued uncertainty due to make the foreseeable few years a challenging one for the financial markets.

The challenge for Advisers, will be trying to diversify and balance client portfolios in a cost -effective way, that still yields the income level that clients are used to receiving.

Fortunately, the post-lockdown environment appears to have encouraged Advice firms of all sizes into considering the benefits of added expertise and collaboration in trying to tackle the income challenges facing their clients.

Many are outsourcing portfolio construction a lot more and it’s good to see diversified solutions like multi-asset featuring widely in client portfolios.

The FCA has been focusing on positive investor outcomes being the primary focus for the advice and investment management sector for quite some time. The evidence here supports the fact we may be getting ever closer to this environment in the regulated advice space; something that will bring cheer to investors and regulators alike.

In the ongoing environment, people want a smoother investment journey, that leads them to their desired outcome. High returns remain an important objective but not necessarily at the cost of high risk. Particularly after the dramatic events of the last few years.

Time for advisers and their clients to both get a well-deserved break, and more positive outcomes.


Story originally appeared on


Like This