Rising to the challenge

None of us will ever know how close to the abyss we have been in the last few weeks. Philosophers would say that economics is an imperfect science because it is not falsifiable. The fact that you can never have exactly the same situation twice running means you cannot know what different actions, monetary or otherwise, would have actually led to.

What we do know is that a lot of people think we came very close to complete meltdown. One well-known financial pundit I spoke to reported going to cash and carry and filling up on food the weekend before the global action was taken by central banks. Sources close to those negotiations say an emergency bank holiday would have been declared on the Monday if a deal hadn’t been hammered out. The idea of high street ATMs refusing to give cash seems fanciful and may have been a long way off, but the fact that serious people have been talking about it has certainly given cause for reflection.

These are extraordinary times and perhaps even by the time you read this we will have gone back to the brink again and possibly even over it.

How melodramatic all this sounds will depend on your confidence in the fundamentals of the economy. Talking to intermediaries at the Corporate Adviser Summit in Hampshire last month I was struck at the level of confidence that still remains in the market. Yes, advisers are talking about a long and deep recession. Yes revenues are falling, assets under advice are down, new joiners are few and far between and those that are being signed up are often being shut out of the benefits party.

But the impression I get is of an industry that is relatively countercyclical. This month we look at the prospects for business protection, an area that must surely be set for growth as companies look to insure their best people. Our investment feature focusing on the performance of default funds highlights the importance of pension consultants in choosing the right default fund for employers. I would be surprised if many clients of Corporate Adviser readers are having difficult conversations with employees in their mid-sixties who have just seen their retirement dreams go up in smoke for want of a lifestyling overlay. And in the healthcare area we see how advisers can offer credit crunch solutions tailored to all budgets through clever use of cashplans.

Now is the time that employers are desperate for information and advice. Yes there will be challenges ahead and some sectors of the market will feel real pain for some time to come, but the corporate intermediary sector appears to be giving real value in time of need.