Lessons Learned from 2020 – wealth wisdom for a happier New Year

As this unprecedented year draws to a close and world continues to struggle with the financial and economic fallout of the COVID-19 pandemic, there’s no question that it has served as a financial wake-up call for many. Even those who will emerge relatively unscathed from a financial perspective have not escaped the worry and anxiety that accompanies living through challenging times. While investors have deliberated about whether to hold or sell, those with pensions have been tempted to cash it out. And like most of life’s challenges, there are lessons to be learned. Our advisers have quite simply never worked harder nor more closely with individuals, businesses and families this year and it’s fair to say that the pandemic has been an education for them too, highlighting some core principles that have been brought into stark relief with real life stories. Below are a few financial lessons our advisers have taken away from this unprecedented period, which we hope you might use to strengthen your financial footing in the year to come.

Josh Gupta – Chartered Financial Planner

• Comprehensive annual reviews are important! Isolation and not proactively talking about things doesn’t help. We are all in it together. The more we share, the easier it becomes.
  

• Have a long-term plan and stick to it. Short term market volatility combined with global pandemic fears – followed by the horror of a possibility of Trump being re-elected – didn’t really help! And that’s before mentioning Brexit! The lesson here is to have a solid long-term plan in place and, more importantly, sticking with it can really help.

Michael MacLeod – Financial Adviser

• The pandemic has really taught us that the unexpected can and does happen. As part of that long-term plan, protecting your income is so important. Our finances are what drive our long-term goals, so don’t allow a short-term issue to impact the long-term goal.
  

• Keep essential expenses as low as possible. I recently had a client who had managed his basic expenses for years and recently I have also looked at this personally. If you live within your means, as opposed to right up to it, then you have a margin of safety. It may sound simple but, while stripping luxuries is one thing, if you have lower essential outgoings then you’re better positioned to deal with the unexpected.

Richard Heath – Director and Senior Paraplanner

• This year has highlighted the importance of a good relationship with your clients, so that they feel comfortable expressing their concerns with you when the unexpected happens. It’s crucial that clients feel confident that you can help them through the worst of it. There is a natural tendency for clients to want to protect what they have left and consider moving to cash following a market correction, but timing the market is extremely difficult and can have a disastrous impact on their investments. We cannot guarantee we will get things right, but we can provide reassurance based on long-term experience and rationality when it is easy to panic.

• Making sure clients have an emergency reserve that covers at least three months of expenditure. Many people feel that they have a secure financial position, but the unexpected can and does happen, so it’s important that there’s sufficient cash to fall back on if income reduces or ceases suddenly. The consequences of an economic downturn, such as COVID-19, have been felt by a significant proportion of the population and it is important that we retain enough capital to meet the necessities in life. Even if the Government does provide some level of support, it usually takes some time to reach those that need it.

Gordon Kearney – Managing Director and Financial Adviser

• Communication has always been a core tenet of the way we work here at Fiducia but its importance during Covid-19 has been magnified. We believe it’s the foundation upon which trust is built and upon which reassurance is developed during times of uncertainty. It’s been incredibly important to our clients that we keep them informed of our decision-making, judgements and the way we’ve been adjusting and adapting our portfolios. This chapter has taught us the importance of regular updates and client communications. It’s easy to panic and not want to discuss difficult scenarios, but a conversation about money should never be uncomfortable. It should bring peace of mind.
  

• As investors, it can be all too tempting to try to predict the future or react to events as they happen yet the dangers inherent in this approach are clear. The pandemic has highlighted how important it is that we, as advisers, are the ones who can keep a cool head while ‘all around are losing theirs’. Emotions can prevent you achieving your investment goals and during these turbulent year, avoiding emotional reactions has become critical. During the past 10 months, it’s not always been easy to sort the facts from the fake news, but fear is not a sound foundation for decision-making, so we’ve really been reminded of the importance of our duty to remain rational and calm.
  

Susie Laws – Chartered Financial Planner and Director

• Whilst technology is vital, electronic communication can never replace genuine human contact and Covid-19 has only reinforced the value of being able to speak directly to those within your support network. For this reason, we will always offer our clients the ability to speak directly to their adviser and will welcome face to face meetings when the guidelines allow.

• It is so important to strip out our emotions when considering investment decisions and markets, though I appreciate this is very difficult to do. Even as an adviser it can be difficult at times to say to clients that they should invest when markets are having a difficult time, but if the investment is to be held over the long term, that really is the best time! As human beings our emotions dictate so much of our decision-making and we all like positive news.

Since March 2020, each one of us has had their life shaken by the COVID-19 pandemic in some way. In working with you, our clients, we’ve not only come to see the way in which Covid-19 has impacted your finances, but have also been reminded of how devastating it is to have a loved one suffering with Dementia, one of the UK’s biggest killers. As a proudly Dementia Friendly firm, we selected the Alzheimer’s Society as our registered charity this year and a percentage of the cost of our Christmas cards will go to their work.

During the hardship and challenges, there’s been the sense among many people that this period has helped us evaluate our lives and focus on what’s truly important. These values include family, physical and mental health and the health of our planet too. The fact that the pandemic came at the beginning of a new chapter for Fiducia, with Directors Gordon Kearney and Susie Laws taking majority stakes in a Management Buyout (MBO), feels like the greatest opportunity to illustrate and act on our values, marrying our heritage looking to the future.

Whilst we cannot predict what 2021 will bring, we feel confident that with the right priorities, goodwill and dedication to our passions, the future will not only be bright, but better.

Lastly, a on charitable note, in respect of our Charity of the Year for 2021: the COVID pandemic has been a difficult time for everyone, but for people facing money worries it has been particularly hard. Citizens Advice Colchester (CAC) is a local charity helping people overcome the problems they face. CAC provides free, confidential, impartial advice to the people of Colchester and surrounding areas with questions about debt, benefits, employment, housing and consumer issues. The pandemic has, unfortunately, increased demand for their services and you might like to consider a one-off or regular donation to help CAC extend its work in the community. You can do this online – and safely – through the CAC’s LocalGiving page by clicking below:

https://localgiving.org/charity/citizens-advice-colchester/

Thank you for entrusting us to working with you here at Fiducia. One of the lessons we’ve learned this year is that we have an incredible team here at Fiducia and the most wonderful clients, many of whom we consider as friends. We wish you and your families the safest and warmest of Christmas seasons ahead of a more positive New Year.