What the world will look like when the pandemic departs is anyone’s guess.
Will an abundance of caution linger and a predilection for hygiene and social distancing remain the norm? Or will there be a pent-up burst of euphoria as America witnessed during the Roaring Twenties that followed the Spanish flu of 1918? We’ll probably experience some combination of both.
For financial advisors, however, the end of Covid-19, which could be a year away, is likely to accelerate trends that were already underway. The fintech boom initially permitted advisors to do more work virtually than they were before the outbreak in March. Going forward, many will use it to scale their businesses.
Health care was becoming increasingly important to clients, and many advisors were adding more services to help people manage what, for many Americans, is the single largest expense in retirement. It’s hard to conceive how health will recede in importance for the majority of people over 40 years old who make up the lion’s share of advisors’ client base.
Lifestyle already is assuming a more important position for many of us. After the terrorist attacks of September 11, the notion that life is short came to forefront of many people’s approach to life. That’s happening again.
An advisor in Atlanta told me over the summer that she was working with a client who is an eye surgeon and was seeking to split her work between Atlanta and a new home she wanted to build in the exurbs complete with facilities for her to perform operations. When warned of the big increase in expenses, the ophthalmologist replied she was happy to work another five or six years.
Many Americans, including some financial advisors, may interpret the “life is short” concept in a diametrically different fashion. Early results are barely in, but a number of advisors report that more clients are inquiring about retiring sooner than they had planned when the pandemic lifts.
On the asset management front, people have been talking about the commoditization of that business for two decades—witness the rise of model portfolios. But after 11 years of U.S. equity index returns of near 15%, a decade of muted returns is a distinct possibility.
Finally, it’s possible we may see a resurgent sense of community in the decade ahead. Americans have come to appreciate folks we sometimes took for granted, not just health-care workers, fire and police professionals, but also those in less glamorous jobs in supermarkets and delivery services. If we emerge as a more grateful, supportive society, all the suffering of 2020 won’t be for nothing.
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