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Financial advisers well-placed to assess the impact of crisis

20 October 2020 Gareth Stokes

Exercise has been singled out as the preferred method to reduce anxiety and stress as a consequence of South Africa’s national lockdown. Profmed, which conducts an annual Stress Index to determine the level of stress among its large base of professional members, said that 60% of respondents turned to exercise to channel negative energy and counteract stress. The 2020 Stress Index singled out fear as the main stressor in 2020. “The latest survey reveals the top fears among our professional members as the fear of losing someone close to them, followed closely by the fear of losing their jobs,” said Profmed CEO and Principal Officer, Craig Comrie. He was presenting findings of the 2020 survey during a webinar.

Forewarned is forearmed

FAnews readers will be familiar with the proverb ‘forewarned is forearmed’. This short phrase, which has its roots in 16th Century Latin, is an observation that your outcomes will improve if you have pre-knowledge of the circumstances that are about to unfold. But it only ‘works’ if the pre-knowledge is accurate and actionable. The 2020 Stress Index revealed that professional South Africans were overwhelmed by the volume of media coverage of the pandemic. Their levels of anxiety and stress were magnified by an inability to separate fact from fiction, or to distinguish real news from fake. A third or respondents went as far as to indicate that they were overwhelmed by media coverage of pandemic. “The COVID-19 crisis has forced us to adapt and be responsive; but many respondents felt anxiety [as they sorted through volumes] of factual and fake information,” said Comrie. 

Previous iterations of Profmed’s Stress Index have singled out work and work circumstances as major contributors to respondents’ stress; but the 2020 index result focused on the impact of uncertainty. South Africans have spent much of 2020 in varying levels of lockdown, forced to contemplate countless different scientific estimates of the infectiousness and severity of the coronavirus. By mid-September, South Africa’s official reported COVID-19 death toll had surpassed 16000, although the excess mortality statistics, published by the South African Medical Research Council (SAMRC), suggest the true count is north of 37300 deaths. Either number is way off the initial mortality estimates that sent South Africa and other countries into hard lockdown. 

Controlling stress through physical activity

Comrie observed that stress was a part of modern life that had both negative and positive consequences. “Many professionals who indicated that they experienced stress also stated that they know how to control it,” he said. Almost 60% of the respondents in the 2020 Stress Index singled out exercise as their preferred method for channelling negative energy and counteracting stress. “We see exercise playing a far more important role in the lives of professionals in terms of how they deal with stress,” observed Comrie. He opined that the increase in overall levels of stress indicated in the 2020 survey could be due to an inability to participate in outdoor exercise through the early stages of lockdown. Discovery Health, an open medical scheme, turns to the ‘big data’ generated by millions of its members and beneficiaries to support this conclusion re exercise. The group recently urged South Africans to “improve their risk profiles through physical activity” following the 37% reduction in mortality rates observed for its engaged members during COVID-19. 

Specialist psychiatrist, Dr Wilhelmina Erasmus, joined Comrie to present on ‘How COVID-19 affected mental health’. She noted that it was too early to draw conclusions about the biological or neuropsychiatric consequences of the pandemic; but was concerned about possible changes in behaviour and cognition. There is concern that dementia-like symptoms, mood disorders and psychosis which occasionally exhibit during an infection could persist. From a purely psychological context, the mental health profession is focussing on anxiety, boredom and exhaustion through the disease, alongside the stigma that may accompany infection. “Patients suffering from the virus are often concerned with whether they will be able to return to their previous level of functioning,” said Dr Erasmus. “They could have impaired attention and concentration, memory and fatigue, and may suffer from guilt due to others taking on their workload”. 

Consider your client’s wellbeing

Healthcare consultants and financial advisers may find pointers from the survey results that could guide their future interactions with individual clients and firms. Around 50% of the professionals surveyed indicated that mental health and stress-related support had not been prioritised in the current year. And a staggering 73% of respondents said they had not reached out to anyone about their stress levels. No surprise then, that Profmed noted an increase in mental illnesses as a consequence of the isolation that people experienced through lockdown. Consultants would do well to consider addressing their clients’ psychological support shortcoming in future interactions. Advisers, meanwhile, should consider ways to incorporate mental wellbeing assistance alongside their mainstream financial planning offering. 

The uncertainty around COVID-19 has translated into a strong desire among professionals to remain on medical schemes cover. “Our membership numbers are stable, and we have retained 10% more members than the year before,” said Comrie. Profmed’s experience is similar that of Discovery Health, which has noticed a 50% reduction in lapse rates for 2020. “We think that this is a sign that consumers recognise how important [medical schemes] cover is when facing a pandemic,” said Emile Stipp, chief actuary of Discovery, during the group’s recent pandemic update. He added that the medical scheme’s debit order rejections, a good sign of economic stress, were stable too. 

Describing the second wave

Both Discovery Health and Profmed are keeping a close watch on the mental health impacts of the heightened anxiety and stress their members have suffered through 2020. They have warned that the second wave will not be restricted to a second spike in infections; but could extend to an unexpected mental health crisis. Profmed also raised concerns that the six months following pandemic could see a turnaround in the lapse experience due to financial stresses and the resulting affordability issues. It is clear that the health insurance adviser community will have its hands full assisting clients to navigate the longer term financial consequences of pandemic. 

Writer’s thoughts:
Financial advisers are well-placed to assess the impact of crisis on their communities, thanks to the broad cross-section of personal interactions they have with their clients. Personal discussion about finances often extend to frank and open conversations about family matters and mental wellbeing. Did you encounter heightened levels of anxiety and stress during recent interactions with your clients? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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