Can long-term planning weather Covid-19?
PSG Wealth Management MD, Paul Gilsenan, looks at why thinking long-term can be difficult when the immediate future is looking volatile.
For business owners across the North East it is proving one of the most testing economic times in recent memory. As we enter the much predicted second wave, Covid-19 is continuing to have huge impacts on economies across the globe. Closer to home, our region is experiencing the impact of tighter lockdown restrictions, leaving business owners, from global cinema chains to emerging sole traders, scrambling to adapt, seek out new revenue streams and ensure the economic scales continue to balance.
With markets continuing to adapt to situations that can change on a seemingly daily basis, it is only natural to ponder not only short-term survival but implications further down the road. Covid-19 is hardly the first crisis to impact the financial sector but on the surface, and in the present, it can appear to be one of the most volatile and unpredictable.
It’s not difficult to see why - after an unprecedented package of support, it was announced in June that UK GDP had risen to above 100% of GDP for the first time since 1963, leading to a number of measures, including the now much debated ‘Eat out to help out’ scheme, to help stimulate the economy. Fast forward a free weeks and fresh pressure has been added in the form of local lockdowns and a plea to once again work from home where possible, putting strain on many industries.
Within this climate it can be tempting to fundamentally shift your long-term priorities, either wishing to embrace shorter term goals at the expense of those further down the road, or becoming ever more cautious, potentially missing out on opportunities that fail to pass a heightened risk assessment.
This uncertainty brings into sharper focus the need for a long-term exit strategy, and wider financial plan, which is often easier said than done. Psychologists argue that when we don’t know how the world will look in a month, trying to think even 10 years down the line is an incredibly difficult ask. By our very nature we place emphasis on solving short-term problems, despite future implications.
This short-term uncertainty, brings into sharp relief the role of a financial planner and a structured exit strategy. Acting as a compass to direct business owners through turbulent short term, while maintaining an eye on long-term goals. For the time being there is plenty to occupy the thoughts of the North East’s business owners, but doing so at the expense of long-term planning can see problems continue to mount, even when the storm has passed.
This was posted in Bdaily's Members' News section by PSG Wealth Management Ltd .