Investment Trends CEO Michael Blomfield

The expected monthly hit to revenue among advice practices is trending up, with an ongoing survey conducted by researcher Investment Trends in partnership with Professional Planner showing planners on average expect revenue to fall by 19 per cent in the month ahead – the highest projected decline since the crisis hit.

Preliminary data from the Business Continuity under Covid-19 study, which has gauged adviser sentiment on a weekly basis during the pandemic, revealed a marked increase in concern from advisers about their revenue.

In the week ending April 6 advisers believed business revenue would decrease by an average of 16 per cent in the month ahead. Sentiment rose in the following weeks as advisers predicted a 14 per cent, then a 13 per cent drop in revenue. By April 27 the tide had turned with the figure back up to 14 per cent, before it cratered at 19 per cent in early May.

“The volatility of people’s views and emotions is super high at the moment,” says Investment Trends chief executive Michael Blomfield. “That’s one of the things we’re trying to observe.”

Blomfield points out that a 19 per cent drop may be the nadir of adviser sentiment around revenue; the result came in just before the national cabinet’s announcement that ‘stage one’ of an abatement in the Covid-19 restrictions was forthcoming. While the announcements may not have a material impact on adviser revenue just yet, the good news will likely translate into more positive remuneration forecasts.

“The announcements, if anything, have given people an excess of confidence,” Blomfield notes.

The ongoing study will track the pulse of the advice industry during the pandemic, with this the first in a series of stories breaking down and analysing the relevant data. You can contribute to the data-set here.

Despite the wild swing in immediate remuneration forecasts, advisers seem to have agreed on how long it will be before their revenue returns to normal. After starting off at around 10 or 11 months in early April, advisers have predicted a 9-month disruption to revenue in each of the past three weeks.

Adviser have stuck to a belief that the lockdown will end in August or September, Blomfield reveals, with few now believing the situation will remain beyond six months. At the start of April advisers on average estimated the lockdown would finish in 5 months, but in May the average estimate is down to 3 months, which indicates that the consensus view on the expected endpoint remains relatively stable.

“We’re narrowing down to this view that by August things should open up again,” Blomfield says. “This idea seems to have stayed relatively stable.”

On the client side, Blomfield observes that while only 42 per cent of advisers have proactively contacted every one of their clients since the start of the crisis, 83 per cent have contacted ‘most’ of them. Both these numbers have been trending up since early April when the number reporting they had contacted all clients was at 35 per cent, and the number who had contacted most was at 72 per cent.

“It’s an interesting one and I don’t want to be negative about the results,” Blomfield says. ‘It takes time to contact clients, and it’s definitely moving in the right direction.

The CEO notes that the data also shows how effective they are at keeping their clients relatively sanguine through the crisis, with 86 per cent of advisers reporting the mood of their clients as “concerned but calm’. That number has remained between 86 per cent and 91 per cent since Investment Trends started tracking in early April.

“It’s telling us that the levels of optimism are rising. There’s a bit of a sense that things are going to be OK,” Blomfield says.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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