By: Mzwandile Mtshali, Executive of PPS Advisory Services and Enablement
Toward the end of 2020, we counted the hours for a new year to present itself, with the hope for a fresh start and new beginning. Now, we’re in that new year, and everything feels a bit like déjàvu.
The challenges and difficulties of 2020 have just rolled over, so perhaps all we can do is reflect on the year that passed, collects the teachable moments and prepare ourselves for 2021.
Let us take a step back and learn from the teachings of 2020. Vernon Law said that experience is a hard teacher because she gives the test first, the lesson afterwards.
With challenges and trials under our belts, our past experiences can pave the way for a better tomorrow.
There are several key financial trends from 2020. These include:
1. The importance of having our finances in order
If anything, 2020 has highlighted the cliché ‘anything can happen, and the
importance of being prepared. What we saw during 2020 was when people are under a financial strain, insurance is the first to go. However, professionals bucked the trend reflecting a much lower cancellation rate than the industry.
Another trend was increased realisation of the risks to their mortality, and that
they are not here forever. It took this pandemic to know that they’ve got to
address what will happen should they no longer be here.
2. Insuring against uncertainty
Life products, such as life cover and sickness cover, have undoubtedly shown its
value – insuring against the unknown during times of unprecedented uncertainty.
What we found over the lockdown period is that members tend to sign-up for
additional products when they realise the value they are getting from the current
products in place. They also recognise the value of the expert advice provided by
Many clients realised that their wills required updating and pursued the
opportunity to restructure their estate plan.
3. Accelerated digitisation
Where red tape once meant a three-year plan to implement digitisation,
companies fast-tracked their processes, implementing plans within a relatively
Here, we saw an uptick in innovative products and a change to business models.
For example, financial advisers made a 100% shift towards digital consultations,
using digital signatures and online meeting facilities such as Zoom and Microsoft
Teams. Relationships are key, so this is tempered with a hybrid approach of digital
and in-person consultations when possible.
4. Ongoing learning and adaptability
Covid-19 saw companies being forced to move entire workforces to work from
home (WFH). The challenge was for employees to learn to juggle a work-life
balance. Meetings also became more productive as companies realised that not
everyone needs to be sitting in the meeting to achieve successful outcomes.
5. Responsible investing
Investors are giving priority to investments that uphold sustainable practices
which benefit the environment and society. According to the Schroders’
Institutional Investor Study 2020, 67% of institutional investors believe the role of
sustainable investing will become more critical over the next five years.
The lessons for 2021
- Essentialism, or the pursuit of less, is real. Financial advisers need to continue to show true value to their clients by staying in touch and offering services such as reviewing insurance covers and premiums once a year, providing an analysis of their holistic financial plan, and ensuring that their Will is up to date.
- To stay financially secured in the short term and long term, financial advisers should advise their clients to review their spending habits and advise on how they can invest smartly with the extra money. Alternatively, if a client was forced to dip into their retirement savings, now is the time to evaluate how they can make up the shortfall.
- Don’t be afraid of technology. Digitisation is different to everyone, but the important thing is to equip yourself as best you can so that you don’t get left behind. We need to open ourselves to change and to unlearn and relearn.
- Lastly, as the tax season fast approaches, don’t forget to advise clients on work from home tax benefits when submitting tax returns this year. Assisting your clients to maximise their tax demonstrates the additional value you can add to their lives. PPS Specialist Support Services can assist you with this and any financial planning requirements you may need to offer your clients an optimal and holistic financial plan.
Disclaimer: Kindly note that this does not constitute financial advice; the information provided is purely informational. In terms of the Financial Advisory and Intermediary Services Act an FSP should not provide advice to investors without an appropriate
risk analysis and thorough examination of a client’s particular financial situation. The information, opinions and communication from the PPS Group or any of its subsidiaries, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither do they constitute an offer or solicitation in any manner. PPS is Licensed Insurer and Financial Services Provider.