The Coronavirus is wreaking its havoc across the world health and financial systems. Circumstances and advice are changing daily if not hourly. It would seem that most Australians have finally got the message about how serious the situation is and that it will not be resolved for months. Leaving aside the health issue, which should be taking the priority at this point - the financial repercussions of company shutdowns and job losses are yet to be appreciated in fully appreciated. This is understandable, given so much uncertainty at present. But with stock market volatility in uncharted waters, many Australians are and will be looking to the advice community for guidance as to the best way forward.
Recent reports have said that up to 2 million Australians could lose their jobs as a result of the disruption caused by the Coronavirus. The “current” unemployment rate is 5.1%, but senior sources in the banking and forecasting industry have said Australia was headed for an unemployment rate of 15 per cent or more. Over 2 million people are employed in the retail, accommodation and food services industries in Australia alone – around 10% of the total workforce. Australian states are progressively shutting down economic and social interactions with, by their own admission, increasingly draconian measures. Borders are being closed. All international fights have been banned. Tourism has been crushed. Not to mention university education and what may happen to primary and secondary schools.
Usually in an economic downturn or even a recession, the government does everything it can to stimulate and support an economy. Instead, now whole sectors of the economy are being shut down.
This is different.
Given a potential vaccine may be 12-18 months away, the severity and the full extent of the crisis will depend on how fast the community can slow the virus’s transmission and spread. China, where the virus was first seen, seems to have made progress in this regard but many fear the numbers coming out of that country are suspect and should not be relied upon.
Apparently, President Trump wants the disruption in the American economy to be over and start kicking off again by Easter. Global stock markets have lost around 30% of their price since their peaks in February, though overnight the American market shot up 11% - potentially based on Trumps actions, plans and/or hopes? In fact, a spokesperson from the World Health Organisation (WHO) said overnight that the US risks becoming the next centre of the coronavirus outbreak as the country is experiencing a “very large acceleration” in cases. 5000 new cases 5 days ago, to over 10,000 yesterday. The administrations medical experts are urging that testing for the virus should be restricted to patients who have already been hospitalised due to shortages in critical components for the diagnostic test.
In Australia, unprecedented and emergency measures are being rolled out en masse. One of the major announcements just yesterday was for people to access their Superannuation early. If you are experiencing financial stress as a result of coronavirus you may be able to access up to $10,000 of your superannuation in 2019-20 and a further $10,000 in 2020-21. The government is expecting up to $27 billion (less than 1%) to be pulled from the superannuation system. It is not clear on what they are basing this expectation. 
This Google Trends graph says it all. Searches for the term “Superannuation” have increased by 400%. We are encouraging everyone right now to get in contact with an adviser, to help get a grip of the all the measures the Government is putting in place.
The decision on superannuation and the ongoing market volatility and uncertainty has meant that thousands of people will be looking for further advice on their Superannuation and their financial future. It would seem this movement is already taking place.
Adviser Ratings & our partners, AustralianSuper with our white label "find an adviser" platform, are seeing record volumes of traffic, adviser profile searches & leads coming through from investors.
As well as direct leads, we’re getting enquiries on a daily basis like the following:
“l am with an Industry fund, to which investment option should l transfer my money to prevent losing any more money, l am not interested in profit, just no further loss?”
People need advice and people want to know what to do. We’d like to know what advisers are doing to prepare their clients for the near and medium term. If any advisers have been publishing blogs or newsletter for a general audience regarding the coronavirus and their response and advice, we’d be happy to amplify appropriate content in our newsletters and on our website.
Contact admin@adviserratings.com.auif you have anything to contribute.
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"Here's something that will resonate with older people...those who've had a lifetime of experience at or near the end of careers. Most people (especially, but not confined to those) in senior positions, or in authority, are probably doing their best, but their best is often not very good, because they're still learning as they go. When you've been around long enough you know that most people are guessing much of the time. Only a few people are both intelligent enough and interested enough (in any particular topic) to be on top of it, so DON'T believe that the conventional wisdom is (usually) right; It isn't. Look for a well thought out and reasoned answer and then only after testing the assumptions behind it. Our clients were only 10-20% in shares from January (and earlier) and half of that was gold-related. The response to this situation is to have plenty of cash now and to slowly deploy it to shares (dollar cost averaging by adding 1-2% per month into market over next 24 months) but you can only do that if you weren't overexposed to shares going into March. Also, understand that this is going to be a liquidity crisis and credit crunch, so even bonds will get hammered, as they are 'risk assets' rather than 'defensive assets'. Be OUT of bonds and that means reduce or get out of 'conservative' funds (that are overweight bonds Bonds have also had their run. Be in cash and preserve your capital rather than attempt to mke wealth by investing We (all) make wealth by working and providing value to others, and then saving some of what we earn (spend less than you earn, save at least 15% of it) and as advisers our role is to teach people about risk management, rather than 'wealth creation'. As advisers we should be teaching people how to do it themselves rather than pretending we have secrets to wealth. What we can know is what the risks are (and explain them) and also the rules (about tax, welfare, legal - wills, estate planning , etc) and leave investing to the basics and about not losing money. It;s an insult to the inteligence of clients to pretend we know how to invest and to still be advisers...because THEY know if we knew how to we wouldn't still be advisers! Good luck. Be honest. Know that most people have very little clue about what they're doing, even if/when they mean well. And NEVER put more than 50% of your capital at risk; therefore always have at least 50% in cash - real cash, not 'enhanced'!"
Philip Carman 01:22 on 26 Mar 20
"This thing has a long, long way to go. It may well be years before things return to normal, even if the infection starts getting controlled in Australia. Stopping international travel in this hyper-connected world shows you how serious governments around the world are taking the issue. Trump is a moron. The fragility of the economic system has been laid bare and no amount of sloganeering by politicians will change reality. Deal with the health crisis first - then deal with the economic fallout. It's a measure of how much leaders focus on the economy that they seem unable to get their priorities straight and send out mixed messages. "If you have a job - it's essential!" Thanks Scomo! Unbelievable! Muppets, the lot of them."
Keith S 15:35 on 25 Mar 20