The impact of COVID-19 on drawdown review meetings

13 October 2020

COVID-19 and isolation rules have changed the way financial advisers work. Traditionally, drawdown review meetings are best-done face-to-face. But even with lockdown rules easing, this is no longer the default option.

Many clients will currently be vulnerable due to the stresses COVID-19 has created. Not only are they having to endure social distancing for weeks on end but they are also experiencing capital loss and a reduction in their income.

This can cause issues during a drawdown review as the decisions made now will impact the client’s financial future and standard of living for the rest of their life. Therefore, part of the adviser’s job is to identify those clients in a vulnerable state and help them avoid bad decisions.

Common clues

During the meeting, it may not be instantly obvious whether a client is vulnerable, common clues to look out for include but aren’t limited to:

  • Postponing the review
  • Inability to make decisions
  • Snap-decision making
  • A change in personality
  • Stepped change in attitude to risk
  • A lack of interest

By assessing clients against each of the FCA’s drivers of vulnerability – both at the outset and at their regular reviews – advisers can ensure their advice is tailored accordingly.

Important and complex

“For many clients, drawdown is an important and complex time. COVID-19 has brought with it further uncertainty and its impacts are being felt, creating the perfect storm for those in drawdown that some may never fully recover from, primarily due to sequencing risk” says David Cartwright, Head of Insight and Consulting (Wealth and Protection) at Defaqto.

“Our guide is designed to provide an understanding of the concerns clients may be experiencing. It then explains the key steps to consider in every drawdown review. Advisers will be able to navigate all aspects of the drawdown review process and further ensure that the advice they give is always suitable” he adds.

Interested in learning more?

Our CPD accredited document, Drawdown review guide: How to assess ongoing suitability, highlights the key topics for you to consider during periodic drawdown review, to ensure sustainable and suitable advice.

You can download our Drawdown review guide for free here.

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