Five ways financial advisers can beat the cost of living crisis

With inflation at its highest level since March 1992¹ and energy prices skyrocketing, the cost of living crisis in the UK has put financial advice into a whole new light, writes Greg Levine and Adam Saville.

With less money available to households at this time², many clients are watching what they spend while weighing up the best way to save money for the future. Alongside this, encouraging them to purchase something they hope they never have to use – such as life insurance - is not an easy task at the best of times.

Financial advisers are having to work harder to demonstrate value. Meaningful client relationships have always been built over time – and this is truer now than ever before. 

Alongside regular client engagement, another way to achieve this is to deliver value from day one – not only at the point of claim. If a client feels like they can’t live without something, they are much less likely to question monthly charges on their bank statement each month. Cancellations are not good for anyone and clients are likely to take out more if they see tangible value in it. Here are some ways that financial advisers can differentiate themselves during the cost of living crisis.

1. Highlight current trends in the macro environment

There’s a lot happening in the world. Whether it’s rising inflation, interest rate hikes or the Chancellor’s latest measures to support the most financially vulnerable. These issues are no doubt playing on clients' minds and featuring in the conversations you are having, as they look for guidance around social care, tax planning and long-term savings during economic uncertainty and investing amid market volatility. You don't need us to tell you that keeping on top of economic trends is essential, especially today.

2. Help your client ensure their money works for them

More than ever people are looking to ensure their disposable income is going as far as possible. The majority of clients are going to be negatively impacted financially by the National Insurance (NI) levy and those who are wealthier are getting pushed into higher tax brackets or breaching IHT thresholds. This is where a financial adviser can help ensure clients don’t fall short of future goals, especially where they might be looking to manage large sums of money as inflation rises.

3. Raise awareness about the need for financial resilience

Budgets might be tighter but having a conversation about financial protection is more important than ever. How would your client cope financially if they – or their partner – were unable to work due to sickness or injury? In the past, people might have expected to rely on cash savings, but with inflation higher than interest rates their money is less likely to go as far. It’s therefore crucial that clients fully understand the need for protection as part of a recommendation that offers the most comprehensive cover they can afford – especially at a time when financial insecurity is in the spotlight.

4. Differentiate yourself by delivering value from day one

Aside from the peace of mind and the reassurance financial advice can bring, intermediaries can set themselves apart by giving clients something actually want to use. Most life insurance offerings only benefit clients either near to, or at the point of, claim. However there is an opportunity to deliver more than just additional services. Lifestyle benefits not only save clients’ money, but help them live a more productive, enjoyable life in a way that benefits all involved long before a claim is made. Lower product charges for investments can also be used to incentivise positive lifestyle choices and help ensure your clients' money goes further.

5. Don’t just protect or help them save, make them healthier

Life and health insurers might talk about wellbeing, but very few use behavioural economics to improve outcomes and help people to live longer in good health as a result³. What better way to justify premium costs than offering clients more than just cover that pays out when something bad happens? Or lower investment product charges if they take steps to get healthier?

Find out more about our latest enhancements to the Vitality Programme and how we are encouraging your clients to take the ‘Next Best Action’ for their health and wellbeing.

Sources:
1. UK inflation hits 30-year high, Reuters, 23 March 2022
2. https://www.mirror.co.uk/money/cost-living-energy-bills-help-26609653
3. Members engaged with the Vitality Programme are at least 10% more likely to improve their health Across seven key lifestyle factors which include physical activity, sleep, healthy eating, alcohol intake, smoking, BMI and mental health, based on Vitality data