Financial and Psychological Reverberations During COVID-19: Evidence for Individual and Generational Turning Points?

The COVID-19 pandemic has been identified as a cataclysmic event impacting the psyche of nations, communities, families and individuals (Kulkarni, 2020). Its influence is far-reaching resulting in shocks to physical and mental health (Ahrendt et al., 2021; Gruber et al., 2020), wealth, income and household finances (Hanspal et al., 2020; Zabai, 2020), labour markets (Botha et al., 2021), careers (Akkermans et al., 2020), education and training (Hurley, 2020; Heffernan et al., 2021 ; Thatcher et al., 2020), and to political and public institutions (Greer et al., 2020). According to Kaufmann (2020, p. 2), the socio-economic shock being felt worldwide is ‘unlikely to be temporary, with scores of millions falling back into poverty, a shrinking middle class, and growing social tensions.’

Australian research shows that, while many sectors of society have been touched by the pandemic, the effect has been uneven with certain groups and individuals more vulnerable to its impact (Australian Bureau of Statistics, 2021 a, 2021 b). These include individuals working on casual and short-term contracts, employees and business owners in the tourism and retail sectors, the self-employed and young people. Speculation has arisen as to whether particular cohorts, such as the ‘COVID generation’ (e.g., Zwanka & Buff, 2020), are likely to experience ongoing aftershocks to their life trajectories because of lasting financial and psychological effects.

This paper discusses a number of the financial and psychological reverberations being felt by different segments of the Australian population during COVID-19. Consideration is given to the extent to which the pandemic has induced a ‘generational turning point’ that alters underlying values, perceptions and behaviours associated with life choices and goals, and to whether ongoing changes are likely to manifest in how individuals consider risk and plan for their financial futures. Such changes are associated with psychological and financial well-being (Irving, 2012; Netemeyer et al., 2018; Newton et al., 2015) and have important implications for financial planning which, along with discerning individual client goals and risk profiles, incorporates generational-cohort and life course views of clients in provisions of advice.

As with past pandemics, epidemics and wars, there are both theoretical and empirical dialogues around whether and how cataclysmic events produce ongoing change in individuals and generational cohorts experiencing the same historical periods and events. Debevec et al. (2013) argue that cataclysmic events create shifts in society with identifiable changes in societal values. Research shows that lasting impacts often fall on those of ‘impressionable age’, young adults in their late teens to mid-twenties (Eichengreen et al., 2021), due to the ‘increased exposure and sensitivity to larger national and world events’ that accompanies the transition through adolescence and into early adulthood (Corning & Schuman, 2015, p. 176). Large-scale life-changing events experienced during these years can lead to ‘collective memories’ of the life phase that influence the cohort’s ongoing values and behaviours (Schuman & Scott, 1989). These are not all negative, however, with research showing long-term positive psychological development of individuals who were teenagers during the Great Depression in terms of increased initiative, responsibility and cooperation (Elder, 1994).

However, the fallout of negative socio-economic events can also lead to ongoing negative outcomes for generational cohorts. Longitudinal studies tracing the effects of previous recessions reveal long-term outcomes for youth experiencing difficult school to work transitions. These outcomes include lower earnings and poorer levels of employment across their first decade in the labour market, reduced long-term life satisfaction and optimism levels for the future, and higher risk of social exclusion and psychological distress (Bell & Blanchflower, 2011; Clarke, 2019; Mann et al., 2020). Analyses of previous epidemics suggest that when government policy responses are lacking or ineffective, young people lose trust and confidence in governments, institutions (including health systems) and political leaders, and may choose to avoid electoral participation in the future (Eichengreen et al., 2021).

Speculation has arisen regarding the lasting effects on under 25-year-olds who have been dubbed the ‘COVID-19 generation’ and are forecast to bear the scars of the pandemic psychologically, educationally and socioeconomically (Major & Machin, 2020; Mann et al., 2020). While the immediate effects of the COVID-19 pandemic on young people are now well-documented, Rudolph and Zacher (2020) warn against the use of the term ‘Covid-19 generation’ because it may lead to generalisations about differences between segments of the population and draw attention to assumed rather than real generational differences. They draw attention to the problem of generationalism which refers to ‘the espoused belief that members of any generation possess specific defining characteristics that distinguish them from members of other generations’(p. 4). The authors argue that generationalism ignores individual differences within cohorts and may lead to age-based discrimination as well as self-fulfilling prophecies for members of a generational cohort in terms of their attitudes, values and behaviours. For them, lifespan perspectives identify the differential impact of COVID-19 on the developmental paths of individuals without having to resort to generations as an explanatory tool.

However, as Buhler and Nikitin (2020) propose, socio-historical contexts can exert strong influences on adult value development particularly when events are stressful and severe (e.g. Depression, World War). For these researchers, the notion of a generational cohort is worthwhile as individuals aligned to different socio-historical contexts may experience different opportunities and resources and be confronted with distinct challenges and obstacles that transcend the individual’s immediate milieu. Hence it would appear advantageous to consider how both individuals and generational cohorts have been affected by the COVID-19 pandemic in analyses of both contemporaneous and lasting effects.

Hershey’s (2004) model of investor behaviour in retirement planning identified ‘cultural ethos’ (societal, family and peer norms) as a significant contextual variable influencing both investor psychology and ‘financial resources and economic forces’ (see Hershey et al., 2007). The socio-historical context of COVID-19 can be theorised to have a similar effect as illustrated in Figure 1 which is adapted from Hershey (2004, reproduced in Hershey et al., 2007). While Hershey’s model did not identify a link between ‘financial resources and economic forces’ and psychological factors, increased understanding of the relationship between the two sets of variables over the last decade indicates that this is an important consideration (e.g., Friedline et al., 2020: Sturgeon et al., 2016). Emerging literature across the pandemic suggests that for many Australians reduced financial resources are associated with financial stress and psychological distress. The following section identifies examples of the financial and psychological experiences of Australians arising from policy decisions and economic forces during the pandemic in order to encourage dialogue around how these variables may interact and impact the financial planning needs of Australians.

Figure 1:

Along with the devastating health effects of COVID-19, a great deal of commentary has focused on mental health issues (Gruber et al., 2020) and consumer reactions as the pandemic unfolded. Consumer reactions offer insight into how individuals have reacted to the pandemic, as well as adjusted their behaviour and thinking to cope and adapt to forced lifestyle changes. Kirk and Rifkin (2020) identify styles of behaviour and thinking that underpin the awakening of a ‘new’ consumer whose consumption patterns have changed, along with their underlying values around the how and why of consumption.

Consumer responses are generally psychological reactions that are based on perceptions, emotions and social influence. For example, hoarding behaviour and panic buying are often explained in terms of multiple mechanisms including fear arising from threat perception, self-protection, risk aversion and loss of control (see Yuen et al., 2020 for a summary). Some see these as instinctual, ‘survival’ responses to perceived threat, while others emphasize perceptions that are socially influenced through media and government announcements (Loxton, 2000). For example, regarding the latter, evidence suggests that government announcements of restrictions played a significant role in large, short-term effects on consumption patterns such as panic buying within Australia and globally (Keane & Neal, 2020).

Other responses such as rejection of behavioural mandates through failure to wear masks or social distance are linked to mismatches between recommendations and personal beliefs as well as the nature of the mandate messages. Greater compliance has been observed when messages have been other-focused, as in the campaign advocating Australians stay home so that health professionals could get on with their jobs, rather than fear-induced, as in campaigns focused on health effects (Kirk & Rifkin, 2020).

While many of the observed behaviours are reactions to uncertainty (Einstein, 2014) and are well-documented responses to crises and disasters (Keane & Neale, 2020), they are also coping behaviours in that they serve to reduce anxiety, fear and loss of control (Yuen et al., 2020). For example, stocking up gives one a sense of control over the immediate environment when other aspects of daily life are no longer within one’s control (e.g., food supply, the spread of the virus, movement within city/state/country). Other coping behaviours include maintaining social connectedness (the upsurge of Zoom and other communication technology) and ‘doing it yourself,’ as evidenced in the rise of home-based projects and increased self-sustainability (Kirk & Rifkin, 2020).

Phrases such as the ‘new normal’ imply that the pandemic may have longer-term effects. Data reveals that the pandemic had an impact on spending patterns in Australia and that Australians perceived they would continue to spend less. Zilio (2020) reports that around 46% of Australians reported spending less in the middle of 2020 than they did at the beginning of 2020 (pre COVID-19) and over half of these (55%) expected to be spending less in 6 months (late 2020). Reasons are likely multifactorial including reduced income, reduced access to/avoidance of shopping centres, as well as financial and psychological caution. According to Bensley and colleagues (2020), an overarching outcome of the pandemic is the rise of the ‘cautious consumer’ who is more planful and more focused on budgeting, deliberate spending, and price consciousness.

Alongside changes in who we are as consumers, there is speculation that there will be changes in who we are as humans. Such transformations relate to underlying values, morals, and identity:

Originally conceptualized as an outcome of war, moral injury occurs when individuals experience, bear witness to, or learn about egregious transgressions which are incompatible with their own morality and expectations (Litz et al., 2009). Numerous realities during the COVID-19 pandemic defied expectations beyond imagination. Among the most serious transgressions were individuals left to die alone while loved ones were forced to stay away, medical personnel compelled to choose who would and would not receive life-saving treatment, and families precluded from carrying out funerals and other rituals related to the grieving process due to social distancing… Depending on how profoundly it is experienced, moral injury contains the power to shape self-identity and world outlook. (Kirk & Rifkin, 2020, p. 128)

While personal values are considered to be relatively stable, there is evidence that when significant changes disrupt lives, value change may accompany adaptation to the disruptions (Daniel et al., 2021). Daniel and colleagues’ (2021) longitudinal tracking of values over 3.5 years before and during the pandemic in Australia (up to late 2020) shows an increase in conservation values (the motivation to maintain order and safety, resistance to change) and a decrease in self-transcendence values (the motivation to promote concern for the welfare of others) and in openness to change values (the motivation to promote creativity, independence, novelty and excitement), although the last of these (openness) showed a reversal in late 2020. The researchers report that worrying about the pandemic was associated with greater change in these three sets of values, while no changes were found across time in self-enhancement values (the motivation to promote self-interest, success, and dominance). While the conservation value changes appear intuitive, those related to self-transcendence are less so. The authors interpret their findings in the light of lockdowns and restrictions, suggesting that a focus on personal safety and preservation may occur at the expense of concern for others while those experiencing ongoing worry may withdraw psychologically and physically from others. As with many of the impacts of the pandemic, the persistence of these value changes and their influence on the goal setting that underpins financial planning is yet to be determined. For example, does an increase in more conservative values in the general population influence preferences around risk and investment types on a larger scale?

The pandemic has given many individuals pause to consider how they live their lives and what they value with flow-on effects for the goals they set for their futures and how these can be achieved. For many, these are linked to financial and psychological wellbeing (Irving, 2012). In the next section, the impact of COVID-19 on the financial stress and psychological wellbeing of Australians is considered.

Lockdowns and restrictions have seen the nature of work and the workplace change significantly. Job and income losses have led to increased financial stress for many Australians and several surveys have attempted to capture these effects. For example, Bensley et al. (2020) report results from a consumer pulse survey of 799 Australians sampled and weighted to match the general population and conducted in June 2020. They segment consumers into 4 profiles (see Table 1) and report the largest impact and lowest economic optimism for those with ‘income in jeopardy’ (24%) due to job or income loss. This category captures Australians across income levels but is predominantly comprised of Millennials and Gen X. This segment combined with those struggling to ‘make ends meet’ sees a significant percentage (44%) of Australians reporting financial difficulties even after the introduction of a raft of financial assistance measures.

As a second example, the Melbourne Institute (2020, 2021) conducted 36 survey waves from April 2020 to July 2021 (at the time of this paper) tracking the impact of the pandemic (Melbourne Institute’s Survey of the Impact of COVID-19 in Australia). They report that the repeated cross-sectional waves contain responses from 1200 persons aged 18 years and over with the sample stratified by gender, age and location to be representative of the Australian population. While the survey waves capture patterns of experience across various segments of the Australian population, it should be noted they are not longitudinal and therefore do not provide information on individual pathways through the pandemic.

Reports indicate that across the first seven months of surveys (April 2020-Oct 2020) on average 25% (range 20-31%) of Australian households reported financial stress (difficulty paying for essential goods and services). Financial stress was more prevalent for certain age, employment and industry segments, however. In late April 2020, just over 40% of the 18 to 44 age group reported being financially stressed. In May 2020, 40% of workers in Accommodation, Food, Recreational Services and Retail Trade reported financial stress (Wave 7). By September 2020 (18th Wave), 34% of those aged 18 to 44 years were experiencing financial stress compared with 24% of 45 to 64 year olds and 5% of those over 65 years.

Estimates of workforce composition using HILDA (Household, Income and Labour Dynamics in Australia) data suggest that 52% of workers in industries ‘directly adversely affected’ by the pandemic are aged 15-24 (Wilkins, 2020). Kabátek (2020) reports that young people 18 to 24 years who are unemployed due to COVID experience high rates of financial stress (62%) and that this is most prevalent in states with ongoing lockdowns leading to job and income loss.

While a number of factors have contributed to mental distress during the pandemic, including uncertainty around the effects of the virus, fear of job loss, and social isolation, Botha et al. (2020) argue that financial stress has been a significant driver of mental distress during the pandemic. They report that 42% of survey respondents indicating financial stress also report mental distress compared to 11.5% of those not reporting financial stress. Figure 2 shows their mapping of the association between financial stress and mental distress (correlation .53) across 2020 and in relation to the introduction and reduction of government support measures.

Figure 2:

Ongoing survey waves in 2021 reveal that self-employed respondents reported high rotes of financial stress in March (50%) and May (42%) followed by those on fixed-term contracts (March 49%, May 48%) and in casual employment (March 46%, May 30%). Higher rates of mental distress are also apparent in the self-employed (March 47%, May 36%). As of the last wave (July 21) conducted at the time of this paper, 23% of Australian households report being financially stressed and 30% making ends meet, suggesting that over 50% of the population is ‘financially vulnerable’. Feeling mentally distressed all of the time was reported by 22% of respondents, with 23% recording an incidence of this some of the time (Melbourne Institute, 2020, 2021).

The above findings show a major and sudden impact has been felt by Australians who have lost household income through job or income loss as a result of mandated public health requirements (e.g., business lockdowns and closures), and knock-on effects (e.g., investment property revenue loss). This impact is across income strata and no doubt reflects the diversity of household income sources: jobs, businesses, self-employment, investments.

The extent to which financial stress underlies the reported psychological distress is unclear. While other factors such as the context of living through the COVID-19 era and all its concomitants are likely to play a role, job and income losses are significant life events involving psychological stress, grief, and impacting self-identity (Griffiths et al., 2021; van Eersel et al., 2019). Research shows that difficulty meeting current and ongoing obligations such as basic needs and paying bills are associated with poorer physical and mental health, while attempts at coping by resorting to pay day lenders, and increasing loans and overdrafts add to the burden (Friedline et al., 2020; Kiely et al., 2015). Not only is the pandemic a major health and economic crisis but it also has a psychological dimension in its impact on key elements underlying eudemonic wellbeing such as a sense of mastery and control, purpose and meaning in life, and achievement of life goals (Irving, 2012). For many individuals and possibly generational cohorts these elements have been placed on hold or stalled indefinitely. In the next section, the impact of the pandemic on psychological dimensions underlying attitudes to risk is considered.

Crises and disasters are historically associated with increased risk aversion (Bucciol & Zarri, 2015), partly because of the uncertainty of the situation and the future. There is emerging evidence for increased financial conservatism at a household level during the course of the COVID-19 pandemic, particularly for those with more experience of the virus and its effects. Yue and colleagues (2020) report findings from China Household Finance Surveys conducted in 2019 and across February and March in 2020 covering 2,595 households. They find that knowing someone with COVID-19 is associated with a decrease in long-term confidence in the economy, a change in household risk preference, increased risk aversion, and a decrease in the amount invested in financial assets.

Similarly, Bu et al. (2020) find in repeated surveys conducted before (Oct 2019) and after the outbreak (February 2020) that graduate students in Wuhan with greater experience of the pandemic through exposure to infections and deaths in their families and communities, as well as quarantining, show reduced risk-taking in an investment allocation task. The researchers argue that decreased general risk appetite is partially explained by alterations in optimism and beliefs about luck and individual sense of control. These students also held more pessimistic beliefs about the economy, their health, and the environment in general.

In the United States, Heo and colleagues (2020) tracked changes in aggregate measures of financial risk tolerance (FRT) in groups of individuals aged from under 25 years to over 65 years from April 2019 to March 2020. They focused on five event periods during the pandemic: no/intermittent cases, recognition of cases, wave initiation, case acceleration, case deceleration/stabilization. FRT, defined as ‘as a person’s willingness to engage in a financial behavior, in which the outcome is both uncertain and potentially negative’ (p. 2) and measured using Grable and Lytton’s (1999) 13-item scale, impacted most strongly in a younger cohort (aged 25 years and younger). While the sample was non-generalisable (self-selected, online survey) with 77% falling in the under 25 age group, the authors note that the decrease in FRT was not evident in the other age cohorts and conclude that ‘if young people have systematically increased their perceptions of risk and reduced their willingness to take financial risk, the wealth accumulation possibilities for those aged 25 or younger may be in jeopardy’ (p. 14). Because Heo et al’s data are cross-sectional it is unclear whether changes in FRT occurred within the same individuals, Longitudinal assessments of FRT in the age cohort are likely needed to see whether this concern is borne out in the longer term.

Economists tend to view risk preferences as relatively stable with some studies showing risk tolerance as stable over time or rebounding after initial impacts such as the Global Financial Crisis (Gerrans et al., 2015). Other research suggests that there are long-lasting effects when individuals encounter severe crises, such as wars, early in their lives (Kim & Lee, 2014) or lasting emotional losses, such as losing a child (Bucciol & Zarri, 2015). Using several data sources including the ‘Survey on Health, Ageing and Retirement’, Bellucci and colleagues (2020) report that share ownership and the percentage of finances held in shares (a proxy for financial risk-taking) in EU countries, as well as the likelihood of holding life insurance, are linked to exposure to the Second World War. Controlling for a range of potential mediating variables, such as mental health, hardship and cognitive ability, the researchers conclude that ‘sensitivity to uncertainty, and a preference for safe situations, are likely to convey the effect of war exposure on financial risk taking’ (p. 11).

While increased risk aversion may be a consequence of COVID-19 exposure for some, for others risk has been embraced. Several authors have documented the rise in retail investor participation in stock markets during the pandemic, including Talwar et al. (2021, p. 8) who report that:

The panic that spread in the wake of the COVID-19 outbreak caused most financial markets to fall drastically, ranging from 10-20% in a single day (Vishnoi & Mookerjee, 2020; Zhang et al., 2020). However, after some initial nervousness, the stock market crash was perceived by retail investors as an opportunity, wherein markets in most countries witnessed increased retail participation as a result (Dubey, 2020) … However, retail investors may contribute to making the markets even more unstable through their biases and psychologically driven responses.

In Australia, this concern was echoed by ASIC (May 2020) after tracking retail investors who entered the market from 24th February to 3rd April. During this time, creation of new and re-activated accounts was 3.4 times higher than in a preceding benchmark phase and the average daily securities turnover doubled to $3.3 billion. Risk taking was evident in ‘behaviours which expose retail investors to possible unexpected losses’ such as orders set to GTC (Good ‘til cancel), frequent trading showing poor market timing, and trading in complex and high-risk products. The average time between trades on the same stock fell from 4.5 days to 1, while for any stock it fell from 2.5 days to 0.9. It was observed that ‘if all retail investors held their positions for only one day, total losses would have amounted to over $230 million’ (p. 9) and that ‘the average retail investor was not proficient at predicting short-term market movements over the focus period’ (p. 9).

Similarly, Ortmann et al. (2020, p. 3) using data on 456,365 retail investors from August 1,2019 to April 17, 2020 (sourced from a discount broker offering an online trading platform under UK licence) report that these investors:

increase their average weekly trading intensity by 13.9% as the number of COVID-19 cases doubles. Investors, on average, add funds to their accounts, open more new accounts, and establish more new positions. We observe the largest increase in trading between February 23, and March 22.

Unlike the movement to high-risk, complex products in Australia, retail investors did not increase their trade in ‘risky’ investments (such as Contract for Difference (CFDs), cryptocurrencies); although it should be noted that Ortmann et al’s findings may not represent all retail investor trading as they are restricted to one brokerage platform (p. 9).

Multiple explanations have been offered for the increase in retail investor trading, for example, as a new form of gambling for those with risk appetites and for whom access to other forms (casinos, pokies) was curtailed (Chiah & Zhong, 2020), herd behaviour arising from social media promotion of trading (Bizzi & Laban, 2019), a response to commentary regarding economic recovery (e.g., President Trump’s claims of a fast V-shaped recovery), as well as economic pessimism (OrtMann et al., 2020). Basu and Dulleck’s (2020) findings with university students show that a range of psychological biases and perceptions influence retail investors’ decisions to invest in complex products including the illusion of control, overconfidence, and framing bias and that, while trust in issuer has a significant bearing, financial risk measures such as volatility do not. No doubt a number of these biases were at play during the observed uptake in trading by retail investors, What the financial outcomes are for those who entered the share market without adequate financial and investment literacy remain to be documented.

Psychological research sees mental health issues including anxiety and depression on the rise during the pandemic with potential effects across the lifespan (Gruber et al., 2020). Anxiety relates not just to health but to expectations about financial circumstances and the economy. Research conducted across the US, UK and Israel in April 2020, reveals that levels of economic anxiety were on a par with health anxiety and that both exceeded anxiety related to isolation and routine change during the pandemic (Bareket-Bojmel etal., 2020).

While anxiety about the economy is apparent, individuals often report that their financial situation is better than that of the national or global economy. This effect, known as the better-than-average effect, has been observed in surveys in the UK and Sweden during the pandemic (Barrafrem et al., 2020) and in Australia in the tracking surveys of the Melbourne Institute. In the UK (March 2020), for example, while 61% and 62%, respectively, of households thought that the national and global economies would be a lot worse in the future, only 29% viewed their own situation in the same way. In Australia in 2020, while around half of respondents believed the effects of COVID-19 on the economy would be felt beyond one year, only 21% believed the effects on them would be of the same duration. In addition, 54% of respondents believed that the recovery would be longer for the economy than for themselves, 39% believed that recovery time would be the same, and 7% that recovery for themselves would be longer (de New, 2020)), As optimism about personal recovery is related to employment (and gender) in the survey, de New (p. 5) suggested that:

Key to the recovery process after COVID-19 is restarting pre-COVID-19 demand levels for goods and services. If employed people disproportionately believe that they themselves will not be affected for as long a time as the general economy, then they are likely to resume spending and consume goods and services. Those with the economic power to consume, are potentially most likely to do so.

In late 2020 it was reported that the Westpac-Melbourne Institute Index of Consumer Sentiment (Westpac, 2020) increased by nearly 12% from September to October and was 10% above the average level in the six months prior to the pandemic, suggesting that personal recovery optimism alongside optimism around recent budgetary measures were taking hold, However, by August 2021 with three major cities in lockdown, lockdowns extending to further local government and regional areas in NSW, and cases in NSW increasing, sentiment had declined with Westpac (2021) reporting that the biggest falls were around expectations for the economy over the year ahead and assessments of ‘time to buy a major item’ and that a slight majority of consumers across all three major states now expect conditions to deteriorate rather than improve over the next year (p. 1). Around family finances, consumers are less confident about the year ahead, the ‘finances, next 12 months’ sub-index retracing 2.7% to 107, led by sharp declines in Victoria and Queensland’ (p. 2). Consumers also registered a loss of confidence around jobs (p. 2).

The ongoing cycle of lockdowns and restrictions while vaccination rates are below herd immunity levels and the delta strain remains an ongoing threat to communities mean that uncertainty around economic impacts, financial resources, and wellbeing continues to be front of mind for many Australians.

Taken together the themes overviewed in this paper illustrate that the effects of the COVID-19 pandemic are complex and evident at the individual, cohort, economic, and societal levels. On the one hand, the picture is of caution and risk aversion. A ‘cautious consumer’ has emerged characterised by increased planning and deliberative decision-making around finances and spending. This caution arises for a number of reasons—economic and health worry, income jeopardy, financial stress and vulnerability, changing values, as well as mental distress and uncertainty and anxiety about the future.

The unevenness of the financial impact across society has meant that certain segments of the Australian population have been more affected than others, for example, those working or owning businesses in travel and hospitality and young people. The diversity of the source of household income loss (jobs, businesses, investments) has seen the impact flow across low to medium to high income households. On the other hand, segments of the Australian population appear to be relatively financially unscathed. Many are cautious but optimistic, are not experiencing financial stress or mental distress, and are continuing life with stability of income.

In this section, consideration is given to the ways in which the financial planning profession has responded to a number of the issues raised in this paper as well as to longer-term implications.

Financial planners have long held the responsibility to support their clients as they encounter environmental threats to their financial well-being. Whether it is a financial shock like the Global Financial Crisis (i.e., Great Recession), the COVID-19 pandemic, or client-specific household shocks such as a divorce or health crisis, financial planners play a vital role in helping families adjust to a new normal or return to the original course of action. (Fox & Bartholomae, 2020, p. 1)

While financial planners are a source of client support through the process of engaging with financial concerns in a deliberative and realistic manner (Irving, 2012), the decline in financial resources of many Australians is the result of economic impacts. As Botha notes, the mental distress associated with financial stress for those most adversely affected during the pandemic is best addressed by alleviating the causes of financial stress, for example, through government initiatives such as income support and job creation initiatives.

Through the course of the pandemic, financial planners have played a key role in assisting their clients with advice concerning income protection insurance, investments, superannuation and approaches to freeing up needed cash (CoreData, 2020). The pandemic has seen an increase in the demand for financial advice in Australia, In a CoreData (2020) survey, 47% of financial planners reported increased enquiries from existing clients while an ASX survey reveals increased intention by non-advised consumers (17%) to seek financial advice (ASX, 2020).

Financial planners are in a position to initiate contact with their clients to encourage realistic appraisal and planning (Brady et al., 2020), address uncertainty and reassess goals. Supporting the financial wellbeing of Australians has important social and public health benefits that have been acknowledged in government initiatives to increase access to financial advice. These include the provision of scaled advice and easing of documentation requirements such as the use of a Record of Advice (ROA) in place of a more comprehensive Statement of Advice (SOA) (ASIC, 2021). Initiatives have been aimed at expediting timely advice, for example around seeking early access to superannuation, as well as reducing the access gap between those who can afford advice and those who can’t, The Financial Services Council (2020, p. 21) sees the provision of scaled advice as having a range of economic and social benefits including:

Improved financial decisions that benefit personal wealth and the economy, such as debt management;

While government initiatives such as JobSeeker, JobKeeper, and the Coronavirus Supplement were aimed at reducing the number of people in financial stress early in the pandemic, Griffiths et al. (2021) argue that withdrawal of these measures and the resulting reduction in access to financial resources may lead to worsening mental and physical health among working-age individuals. They advocate for access to financial planning and financial counselling services to support these individuals.

The United States has seen an upsurge in financial planning amongst older generations as they reassess their retirement and health futures and place a greater focus on assisting younger family members facing financial stress during the pandemic (Edward Jones, 2020). It is possible that similar patterns may arise in Australia along with client goals taking on a more value-based and cautious tone.

In qualitative interviews with financial planners in the United States, Fox and Bartholomae (2020) report that some planners, in helping clients focus on what matters most in their lives, served more as counsellor than planner, They note that ‘the ability of financial professionals to address psychological aspects of their clients, such as financial stress, along with relationship and behavioral issues, has become an essential aspect associated with building and using a financial planning framework’ (p. 2). They view this approach as ‘integrated financial planning’.

In Australia, there is a clear distinction between financial planners and financial counsellors in their training and roles. However, as the effects of the pandemic play out, it appears likely that the professional role of financial planners will require the incorporation of more people-orientated skills and tools that can be considered counselling or coaching (CoreData, 2020). To this end, pathways of training and continuing professional development might incorporate an expanded focus on such skills, Interdisciplinary fields are emerging such as financial therapy which promotes the ‘research and study of financial health and training’ across a range of professionals including financial planners, counsellors, and psychologists, At a time when large numbers of financial planners and advisers are leaving the profession and public perceptions of advisers are negative (ASIC, 2019) there is much to be gained by the profession and its image by broadening its remit. Not all financial planners will see themselves as counsellors or coaches, but for those wanting to broaden their expertise, such skills may provide further career opportunities or add value to the services they offer to their clients. As well as improving consumer trust in advisers, there are benefits in formalising what has often been promoted as central to the financial planning process and adviser-client relationship. It is important to note, though, that the popularisation of psychology and cognate sciences has often led to simplistic and misrepresented interpretations of the knowledge bases of human behaviour. Any movement towards integrating fields of practice needs to rest on evidence-based approaches grounded in research and theory.

For some, the uncertainty and loss associated with COVID-19 have led to increased risk aversion particularly for those with personal exposure to the damaging effects of the pandemic, While, to dote, Australia has fared comparatively well, many of the ‘moral injuries’ described earlier have been felt in the community. Frontline health and medical workers, aged care workers, and families and friends of those who have contracted COVID-19 have had more personalised experiences of the devastating effects of the disease. As with research on the long-term impacts of severe events on risk aversion and tolerance, will there be ongoing implications for how Australians more personally affected by the pandemic make investment decisions into their futures?

As discussed, studies following the long-term effects of major crises on generations indicate that young adults can be the most vulnerable not only during the crisis but decades on. Loss of employment and income, increased risk aversion, or loss of savings through high-risk behaviour may see this generation of Australians needing more financial guidance and education. Financial planning researchers may seek to track the financial behaviours and attitudes of young Australians to ascertain ongoing issues of relevance to their financial futures and how they might be addressed through financial planning policy, education and advice, This might include the effects of risk aversion, decreased risk tolerance, and reductions in financial resources on investment choices and longer-term retirement planning.

At the time of writing, the effects of COVID-19 continue to leave an impact on Australian communities, Analysis of past pandemics, financial crises and significant socio-historical events indicates that there may be lasting effects for particular individuals, such as those most adversely impacted by labour market changes, and for generational cohorts, such as young adults of ‘impressionable age.’ These impacts include alterations to personal values, self-identity, life meaning, goals, economic opportunities, financial resources and attitudes towards risk, all of which underpin financial planning, Currently, the fallout includes loss of income, jobs and businesses and associated financial stress and mental distress, Discerning the medium- and long-term effects is reliant on halting the spread of the virus and its variants and the success of economic recovery strategies and support for those adversely affected. Financial planners play a significant role in supporting Australians in the reassessment of their financial resources and goals during difficult times that many did not anticipate nor prepare for, and in so doing contribute to the ongoing psychological resources of their clients.