No-one in our lifetime has experienced what we – as a global community – are grappling with right now. Unprecedented, unique, unparalleled – words used repeatedly in the past few weeks to describe the impact that COVID-19 is having on our health, economy and way of life.
These are devastating times, but amid the crisis we have proven to be a country adept at ensuring help and assistance is swiftly available - from the many examples of human kindness to financial and other support provided by the government and the community.
And it is on this subject – help – that I’d like to focus my commentary on today. As we continue on under lockdown and our short-term ‘new-norm’, two things are crucial for advice business owners: accessing the support and help you need, and ensuring you are best positioned to support your clients.
Support for your advice business
We’re in this together, and it’s essential to reach out for assistance in need – even if that’s simply to talk through options, concerns or thoughts. To support this, Financial Advice NZ has established the Adviser Peer Support Programme – there for advisers if they would like to seek advice and discuss concerns with an experienced adviser (contact details below).
The key message I hope all advisers take from this article is that support is there – in many shapes and forms. The key thing is to know your business inside and out – analyse and make a plan. And if that plan looks like it needs some assistance, reach out for help. These difficult times can cause many sleepless nights, so rather than trying to go it alone, do make use of the services available to you.
Cash flow management
Plan for now, for the short and medium term and for the what-ifs. Ask yourself some key questions like: what is the impact on your revenue now and overtime? No-one has a crystal ball, but it’s crucial to analyse your numbers and draw the informed views you can.
Another key number to drill down on is your costs. What are your costs – what can you cut and when would you need to? Ask yourself – how bad could this get to – get a clear picture of your hard bottom line numbers. Understanding the worst-case scenario will help to protect you and your business from additional shocks and enables you to have a response plan at the ready.
Talent retention and remote management
If cash-flow is a concern, what are your options to retain your team? Good people are hard to find and we will emerge from this crisis at some point. As well as the obvious benefits of supporting valued staff, retaining talent will be essential to successfully rebound when we come out of lockdown and start the journey back to our new ‘business as usual’.
Also in this new ‘working from home’ environment, what systems can help you maintain a cohesive team dynamic, support efficiencies, manage priorities and importantly, support morale? Reach out to other advisers or contact the team at Financial Advice NZ if you’d like to discuss managing teams remotely.
Client relationships and retention
Reassurance and relationship: it’s crucial to double down on your client communications – especially personal one-to-one phone calls / video calls. Right now we’re not in the advice business, we’re in the reassurance business; it’s about being there for clients – with both knowledge and emotional support. That’s what they will remember and that’s why they will stay with you.
Emerging from a successful lockdown
Two questions about the near-future to think about now: What will my business look like at the end of a successful lockdown? And, what would I like my business to look like in the future?
Amid the disruptions and stress, take some time to think about the positives you could take out of this. How can you utilise the time to progress projects – to find efficiencies, to progress CPD or learning goals, to re-emerge with a stronger articulation of the importance of relationship and how you help clients as an adviser. Whatever it may be, what can this time afford you to achieve?
Government support for businesses, employees and clients
Financial Advice New Zealand has created a comprehensive overview of the various support schemes – for business and the community.
Of course, every day there is more information and we expect to see support schemes continue to respond to new or increased need. Make sure you keep informed of what’s available; there’s plenty of support out there and it’s crucial to access what you need to support your business and clients through these times.
Wage subsidy scheme
All employers affected by COVID-19 can apply for the Wage Subsidy to support employee wages, which is a flat rate of $585.80 for people working 20 hours or more per week, and $350.00 for people working less than 20 hours per week. The subsidy is paid as a lump sum to the employer to pass on to employees; it covers 12 weeks per employee and employers must make best endeavours to pay employees 80% of their normal income.
There is qualifying criteria for the Wage Subsidy Scheme, such as a minimum 30% decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and that decline is related to COVID-19 (there are special rules for new businesses and high-growth firms).
To find out more about the Wage Subsidy Scheme or to apply, click here.
Mortgage / loan holiday
In addition to what individual banks are doing to support affected customers, the Government and banks collectively have agreed a Mortgage Repayment Holiday Scheme. In short, the scheme allows customers to defer principal and interest payments on their loans for up to six months.
Here are some things to know should you need to assist a clients considering the scheme:
- Interest on these loans will still accrue, and deferred interest will be added to the principal amount of the loan.
- Banks will assess the suitability for each customer who is asking for a deferral. Banks will have different approaches to how they manage the process including eligibility criteria – details will be available on bank websites.
- Clients should contact their bank for further details or queries about the scheme. Also they may need to complete a Financial Hardship application, or other documentation required by the bank.
Business finance guarantee scheme
Another scheme agreed by the Government and banks is the $6.25 billion Business Finance Guarantee Scheme for small and medium-sized businesses. The scheme is designed to protect jobs and support the economy with short-term credit, which will be underwritten by the Government up to 80%.
Currently the scheme is available for application by businesses with a turnover between $250,000 and $80 million per annum. We believe the minimum turnover threshold is too high and cuts out a significant number of small businesses – which also includes many adviser businesses. This is a key piece of advocacy for Financial Advice NZ at the moment.
On March 23, 2020, the Minister of Finance implemented a freeze on rent increases and protections against tenancy terminations. What this means for tenants is that landlords cannot increase rents until further notice, nor can they apply to the Tenancy Tribunal to end the tenancy, unless the tenant is at least 60 days behind in rent. If the tenant is 60 or more days behind in rent, the Tribunal must consider whether it would be fair in the circumstances to terminate the tenancy.
At the time of writing this article the COVID-19 response to commercial rent and leases was still to be released by the government.
The previous separate sick leave payment scheme was folded into this Wage Subsidy Scheme on Friday, March 27, 2020. The original sick leave scheme was designed when few people were in self-isolation. A couple of key notes: (1) the Government is working on arrangements for those in essential work who require sick leave due to COVID-19, and (2) applications already submitted will continue to be processed and paid.
From Government support packages to support networks and everything in between – we’re in this together. The important thing for all advice businesses right now is to have a plan, to understand risks and to keep informed of the support options available to sustain their business - and ability to help clients - through these unprecedented times.
For more information about the Financial Advice New Zealand Adviser Peer Support Programme, contact the team on 0800 432 101 or email@example.com.