Help your clients save for a brighter future

13/07/2020 | Zurich Ireland

Investment news

‘Things will never be the same’. How many times have you heard that phrase or one similar over the last number of months? As we move out of lockdown we can be sure that many aspects of the old normality will return – traffic will increase again, towns will become busier - and life will begin again. However, recent research carried out by B&A has suggested that people are consciously preparing for their future in ways they would not have previously.

71% of people desire some change and don’t want everything to return to the way it was before. Similarly, 55% of people are going to be more careful with their finances and will more closely question their spending habits.* This suggests that people are going to end up saving more than before. We have experienced the ‘rainy day’ that we’ve always talked about and that experience is going to live long in memories.

Regular Savings - lets help people prepare for a brighter future

The post-Covid19 world is one of potential opportunity for Financial Brokers. At Zurich we believe that the role of the Financial Broker is essential in helping to guide the finances of the Irish consumer, and the regular savings market is one that is primed for growth. Traditionally this market in Ireland has been dominated by cash deposits and savings accounts in the local Bank, Post Office or Credit Union. However, over the last number of years we’ve seen the beginnings of a shift towards regular savings with companies like Zurich. There are a number of reasons for this shift, among them savers being more aware of alternative flexible options – but perhaps the primary reason is the paltry return people have seen on their money on deposit. Data suggests that over the long-term, holding money in riskier assets can be rewarding. We think that this shift will continue to grow over the next few years.

When to save and invest - it could be now

But when is the right time for your client to invest? Unfortunately, there’s no right answer. We can try to calculate how investments will perform based on analysis of what’s happening in the global markets but it is not possible to definitively predict the future. These are volatile times, with investment markets subject to large swings – just compare this year with last year. Some savers are understandably apprehensive about dipping their toes in the market, with timing being a key consideration in investing. But regular savers can benefit from the concept of ‘unit cost averaging’ so a period of market volatility can actually been seen in a positive light.

Market timing can be a big dilemma, and retail investors can struggle with this. At Zurich we have a wealth of supports to help you position regular savings and lump sum investments with your clients. These include:

• Regular market commentary
• Consumer flyers explaining the fundamentals of long-term saving and investments
• Videos and Podcasts

When to save and invest - it could be now

The new OnlineApply for Regular Savings from Zurich removes the need for a ‘wet signature’ or the need for a digital signature provider such as Adobe or DocuSign – the client validation is completely wholly within the Zurich system. This means you can adapt your sales process to take account of the changed work environment – so if you need to meet your clients remotely, and transact business – you can.

We’ve identified a number of different opportunities for targeting customers in the savings market:

1. People looking to save for the children’s education – we think this is the primary reason why people save and I hope you’ve seen much of the supporting material we’ve produced over the years on positioning this.
2. High net worth clients reaching the pensions threshold – there are over 140,000 people in Ireland earning over €100,000*** and many of them will be affected by the €115,000 pension limit. Impacted individuals could supplement their retirement pot with a regular savings plan to help them maintain positive retirement funding.
3. The rainy day saver makes up a large percentage of people looking to save. But that rainy day has already arrived and surveys suggest many people may now look to saving and preparing for a brighter future.
4. Saving for a home deposit is becoming a family affair – with parents and even grandparents pulling together to help get their children on the property ladder. Recently we’ve seen a great deal of interest in our savings plans for this very purpose.
5. Estate planning can be a complex area, but planning for it in advance will help minimise the burden of Capital Acquisitions Tax for your client’s loved ones and maximise how much they can pass on so their gift has the greatest value. A savings plan can be used to avail of the annual Small Gift Exemption and to extract wealth from their estate.

Each of your clients has different financial goals and dreams. We’ve produced a suite of marketing materials tailored to your client’s individual financial needs, whatever stage of life they may be at. Zurich offers a wide range of support for Financial Brokers with a suite of sales material that can help highlight the importance of saving for your clients. For more information, speak to your Zurich Broker Consultant.

*Source: B&A Research, Covid-19 Consumer Sentiment Tracker Ireland Phase 2, April 2020
**Source: Central Bank, February 2020
***Source: Revenue.ie, 2016