In the Surrey village where I live, we’re currently in what one of my colleagues described as ‘the Cranleigh bubble’. She means that life here appears relatively healthy, by all accounts.
There do not appear to be many severe cases of the virus in our community. Residents are, mostly, well behaved and following the government guidelines. It’s undoubtedly quieter out there than usual, although the view from my office (aka the bedroom) window suggests that the majority are exploiting the option to exercise once a day.

Many local businesses have ‘pivoted’ to provide a takeaway or delivery service. One of the local pubs now offers such a comprehensive range of groceries for next-day delivery that, assuming they continue the service post-crisis, we won’t be going back to the big supermarket chains.

It appears to some to be a bubble and I wonder if we might be living in a Financial Planning bubble too?

The economic impact of Covid-19 is dramatic, with the worst probably still to come. With an estimated 1.6 million new Universal Credit claims in the past month, the unemployment rate looks set to spike in the coming months.


 
The latest official figures show a quarter of businesses closed temporarily in the fortnight to 5 April. More than half of those businesses that kept trading saw significantly reduced turnover.

The UK economy itself looks likely to have contracted by more than a third in the second quarter. A recession of this magnitude is hard to comprehend in modern times, and we can only hope for a sharp bounce-back once some normality returns to UK PLC. Yet, within the Financial Planning bubble, things don’t appear all that bad. 

For a service sector business to move from working in an office to working from home is pretty straightforward. Assuming you can redirect any physical post and forward the phone lines, we can continue working with a laptop and mobile phone.

Physical meetings are easily replaced with Zoom video calls and screen sharing. Some might argue that video conferencing offers a more efficient method of communication with clients; one thing few of us miss during this crisis is driving around the country seeing clients.

Yes, markets took a hit when this all kicked off. They might fall further when the economic shakeout from the Coronavirus becomes more apparent.
 
However, within well-diversified long-term investment portfolios, the fall in values is nowhere near as bad as newspaper headlines report. I’m assuming here none of my peers were trying to be smart, including West Texas Intermediate futures in their client portfolios.

So, life goes on for the Financial Planner. New client engagement becomes a little more challenging, but the financial impact of this might not be felt until the autumn, depending on the lead times within your pipelines.

But the global and domestic economy is hurting. The scale of job losses, business closures and carnage on the High Street are unprecedented. 

We face years of recovery. Taxes are likely to rise, along with interest rates. Once the lockdown is lifted, social distancing measures will remain in force until a vaccine is developed, a process which could take years.

If you’re living inside the Financial Planner bubble, now might be a good time to think about the broader implications and how these will change the nature of your business.