5 Long-term Impacts Advisors Foresee Post COVID-19


There's no going back to what was normal

Emerging from the COVID-19 pandemic, everyone keeps looking for a return to “normal.” We long for life to settle down – especially when it comes to our finances. However, as the saying goes, “normal” is just a setting on the clothes dryer.

Some suggest that we’re moving into a “new normal” as evidenced by our new standards for social interactions and workplace rules. But this new normal extends beyond replacing handshakes with hand sanitizer.

Here, we discuss five impacts or trends that financial professionals believe to be the new normal within the industry as we move into a post-pandemic world. Let’s start with everybody’s favorite topic: taxes.

Tax Rate Changes

Nearly half of Americans (47 percent) anticipate taxes “to go up significantly in the next four years” according to a March 2021 Harris poll of 3,002 adults ages 18 and older.

DanColvin244“On January 1st, 2026 the Tax Cuts and Jobs Act will sunset. At that point, taxes will increase for the majority of Americans overnight,” said Daniel Colvin, a private wealth manager at Fiat Wealth Management in Wayzata, Minnesota.

The Tax Cuts and Jobs Act was passed toward the end of the Trump Administration’s first year in office on Dec. 22, 2017 and brought up sweeping reductions to business and individual taxes as well as nearly doubling the standard tax deduction for individuals and families to $12,000 and $24,000, respectively.

The U.S. Congress has a few years to take action for potentially extending provisions of the 2017 law, but that seems unlikely to occur under the Biden Administration. At his first official press conference, President Biden criticized the TCJA stating that 83 percent of its economic benefit went to the top one percent of earners.

The TCJA and its tax implications are complicated and varied depending on the circumstance each individual and business paying the IRS finds themselves in.

The nugget for advisors and clients today is: the pending sunset of TCJA is warning to ramp up tax planning.

“Most pre-retirees have the majority of their retirement assets in qualified retirement plans which will be taxed at future rates when they take distributions,” explained Colvin. “Finding a way to incorporate pro-active tax planning into retirement planning is critical for those currently contemplating retirement.”

Traditional Planning Must Consider Extremes

Financial planning won’t return to its pre-pandemic methodology when COVID-19 concerns are either eliminated or mitigated.

That is the expectation that Ben Quinney, marketing director of BHFM, LLC, in the greater St. Louis, Missouri, area, has prepared himself and the rest of his firm to accept and work according to going forward.

“What the crisis has taught us is that traditional retirement planning cannot account for dramatic changes in the economy,” Quinney said. “Like a pandemic.”

Clients Have Healthier Relationships with Money

Having to confront dwindling savings and loss of cash flow was a downright ugly experience for many during the height of the pandemic.

But what doesn’t kill us, makes us stronger? Right.

Well, in the case of how people view money, it appears the pandemic has left many of us with a healthier relationship with dollars and sense.

BD262“It takes discomfort in many instances for growth to manifest itself,” said Brian P. Diffily, partner and investment advisor representative with Granite Bridge Wealth located in Livingston, New Jersey. “One thing we noticed almost immediately from our clients was something they did all on their own: They took a self-evaluation of their own financial behavior. Their relationship with money has matured in the wake of 2020. It’s become healthier. And we love that.”

These highlights from recent surveys also demonstrate improved money habits:

• 53 percent of consumers report more savings in the past three months according to a Harris poll conducted on behalf of CIT bank and reported on
• 76 percent indicated they now have a household budget, according to a March 2021 report by Coinstar, and 46 percent said they will continue to “tighten the belt” post the pandemic

Warp Speed in Digital Trend Adaptation

Satya Nandella is the CEO of Microsoft told Wall Street investors in April 2020, “we’ve seen two years’ worth of digital transformation in two months” when quantifying the ramped-up usage of its online meeting program, Teams.

In another time comparison sure to make your head spin, Tom Puthiyamadam, consumer markets and digital products leader at PwC in Valhalla, New York, said the pandemic forced companies still deferring a warm embrace of the digital world to “condense” more than five years of adaptation into a six-month period.

It doesn’t appear as if digital trends will slow down anytime soon – if ever.

The mindset has shifted. Remote work is king. Digital connection is the thing, baby.

Or perhaps we should more astutely say that working in a digital environment will only continue to grow – especially in the financial services industry.

“Pre-pandemic, while investors conducted some financial transactions, such as bill payment, online, as many as two-thirds of investors preferred to meet with their advisors in-person, wrote Chris Sonzogni, director of advisors marketing at SmartAsset headquartered in New York, in a commentary for Think “Today, investors are signaling that they’re not only comfortable discovering an advisor online, but also maintaining a relationship virtually.”

Sonzogni points to a 27 percent increase in “investors’ willingness to work remotely,” as documented by his firm’s advisor matching tool. In November 2020, 63 percent of investors told SmartAsset they were willing to work with an advisor in a remote capacity. Prior to the pandemic, the percentage of those willing to do so was less than half.

Not only are clients more open to “remote-based” financial planning services, the industry itself has discovered that a brick and mortar office isn’t completely necessary.

“Companies have learned that they can successfully operate with remote labor,” said Chad Gordon, wealth advisor with GreenStar Adviors based in Centennial, Colorado. “At a minimum, companies can no longer say ‘remote doesn’t work for our industry.’”

Exodus from the City

RM 325With “remote work” still replacing “in office work,” more people are leaving the city behind. They aren’t necessarily opting for farm country, but they are drawn to smaller towns.

“There’s not necessarily a driving need to come into the office every single day,” said Rebecca Miller, co-founder of Dynamic Wealth Strategies in New York, New York, also noting that change of work venue may become more permanent allowing workers to live further from large cities. “This may bring additional vitality to local businesses in smaller towns – more opportunities for arts and entertainment, independent restaurants, shops and the ‘scene’ and vibrancy that ‘city people’ crave.”


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