Financial advice in a crisis

The past year was dreadful, to say the least. What has made it even more difficult is that it was collective as the whole world suffered immensely in many ways in the past year. Amy Underwood, a Behavioural Economist, spoke at a recent webinar about trauma and how we, as humans deal with it. She mentioned that, generally, we tend to go through it at different times, allowing us to call on our network of friends and family for support and comfort. What made the events of 2020 even more difficult for all of us to contend with is that we were all experiencing the trauma simultaneously, which meant little to no external support was received.

With the loss of financial security for many, the importance of financial advisors’ work was in the spotlight. It has become clear for many that keeping good financial habits and having a good financial back-up plan is vital, particularly in times of turmoil.

The financial planning industry, in general, has come a long way from a product focus to behaviour management. Talking numbers and drafting a financial plan is only half of the solution and possibly the easiest part of the journey. The hardest part of financial advice is understanding clients’ emotions in all phases of their financial journey, and particularly in times of distress so that the right kind of advice and intervention can be provided to clients that will help them navigate their way through the peaks and troughs with perspective and confidence. That is why, from the initial meeting with clients, they get to understand that no matter how great the financial plan is, life happens and there will be the temptation to veer off course. Emotions must be understood and addressed to avoid making mistakes that will be regretted in the future.

his article was featured in the Financial Planning Institute of Southern Africa’s website. To read the rest of it, please follow this link –

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