How advised individuals are getting ahead during COVID-19

Advised clients are in a much better portfolio position during COVID-19 than their unadvised counterparts, according to an investment expert

The managing director of Wealth O2, Shannon Bernasconi, has explained how after a slow first month of the pandemic, “everything has picked up to even greater scales than before – where advice is now ultimately more valued than before”.

She said last four weeks has seen a “rapid increase in numbers of clients coming on board” the platform through the creation of adviser-led relationships.

COVID-19 has shone “a positive light on the need for advice”, according to the managing director, who outlined how those individuals who have utilised advice have done better in some cases, especially having avoided the flight to cash that happened in the retail sector.

“Clearly, once you’ve sold, you’ve lost it,” she conceded, but noted this as much less likely to have been the case for advised clients, who have “overall done really well”.

In her experience, client portfolio returns “were much less down than the market – mostly because the advisers had diversified”.

“Some advisers had even been more sceptical as to whether the market was going to take a correction naturally even prior to COVID-19, so quite a few [were] protected.”

“So the impact, in terms of the overall returns, was definitely better than the market returns,” she continued.

Ms Bernasconi flagged how some advisers had even utilised their ability to tweak and bulk rebalance certain portfolios during the peak of the volatility, and patterns within portfolio management that aided in protecting clients even further. Ms Bernasconi said “what we didn’t see was mass panic”.

“We didn’t see a sell-off to cash – it was a lot less of a panic and more of a tilt or tweak that was going on.”

This flowed through to less reliance on government schemes such as the offer for early access to super, with Ms Bernasconi able to count on just one hand the amount of Wealth O2 clients who have indicated a need to access their retirement savings in this way.

“That does align to the fact that they were all advised clients and obviously the advice wasn’t to take the money out of super in those cases – so that’s a positive,” she commented.

“My view is that it’s not a great strategy either, but I do feel for those that need it.”

“If you can live without it, then definitely it’s better for the long run,” she advised.

The managing director has also considered that the pandemic has created a unique scenario for Australians, with the role of advice “much more focused through this pandemic than it would have been in a GFC scenario”.

“It’s a lot more focused on ‘my journey’ rather than the economic impact on me indirectly,” she said.

“Where the GFC was more of a cascade from the big banks going into the economy – this is actually personal.”

She explained that the COVID-19 crisis’ need for advice stems from concerns around “what’s going to happen to my rental property, [and] what’s going to happen to my assets?”

And with advisers now adopting “new ways of engagement through digital platforms” and developing an ability to improve the regularity of client contact through regular 15-minute video calls and the like, Ms Bernasconi said, “the idea that [advisers] can get that client contact more often is a positive for everyone”.

It’s a “way of the future – whether they return to offices or not”.

Our investment team is ready to help you accomplish your financial goals and needs. You may wish to speak to us by booking an appointment or by booking a time for a chat at this link.

Article reproduced from Nest Egg by Grace Ormsby

Take The Next Step, Book an Appointment
Contact Us

Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.