BR Guide FINAL 20 Feb

69 WORKING WITH PROFESSIONAL CONNECTIONS 68 WORKING WITH PROFESSIONAL CONNECTIONS Working with professional connections In 2007, the Legal Services Act appeared on the radar of those in the legal profession. The main change the Act brought about was the introduction of alternative business structures (ABS), allowing non-lawyers to take a financial stake in, and become partners of, established law firms. Although the Act took four years to come into force, it promised to open up competition in the industry for the benefit of consumers, as, aside from the very small list of reserved activities, all solicitors’ work is now up for grabs and there is much more competition in the sector. Yet, the potential benefits are not only available to consumers. There are significant incentives for those whose professional advice can add value to the services of lawyers and accountants, as well as streamline the advice process. And there is a continuing drive from the legal regulators to ensure that this includes financial advice: in February 2017, the executive director for policy at the Solicitors Regulation Authority (SRA), Crispin Passmore, said solicitors needed to work more closely with financial planners to provide a more holistic service. It’s also worth noting that accountants often have long-standing relationships with their clients, meet with them regularly and understand critical issues such as the client’s attitude to risk, current net worth and tax position. So, a connection with an accountancy firm could also yield significant amounts of new business for an adviser as well as a more seamless service for a client. Accountants, Legal Firms and Financial Advice The work of solicitors and accountants can often interact with financial advice. Of course, the challenge is where there is common ground, there may be concern around client ownership and losing them to the financial adviser firm. According to Ian Muirhead of SIFA, the key to a successful relationship is for the IFA to complement the solicitor’s advice. Lawyers’ crossover with financial advisers and planners Cross option agreements Professional deputees/attorneys Divorce; splitting assets & financial future Will-writing & efficient tax planning Business owner IHT planning Equity release LAWYERS’ CROSSOVER WITH FINANCIAL ADVISERS & PLANNERS Private client legal practitioners often act for clients in the sale of properties, setting up and running trusts, winding up estates, making wills, later-life and retirement planning and matrimonial work. In particular, there are significant, obvious synergies between financial planners and lawyers around trusts, wills and estate planning. Nevertheless, despite it being a legal requirement for trustees to ask for professional investment advice, lawyers have tended to retain relations with stockbrokers rather than establish formal links with advisers. • WILL DRAFTING: solicitors may need help with trust planning, including EIS, tax mitigation, insurance and death benefits. • THE BEREAVED WIDOW: may require advice on provision for dependants, annuities and trust tax and property, as well as potentially funding long term care. • CROSS OPTION AGREEMENTS: the use of BR within a business is an adviser’s domain but lawyers draft cross option agreements that give both the estate and the party which may acquire the shares the option rather than the obligation to do so. As non-binding contracts, these leave BR intact. • PROFESSIONAL DEPUTIES OR ATTORNEYS: in relation to financial affairs BR allows some planning without the need for applying for Court of Protection approval. • A TRUSTEE: will require advice around different tax regimes and the right tax wrapper. • DIVORCE: solicitors are vital but a financial planner can provide essential input into forming a suitable financial agreement, including valuing pensions and investments, advice on pensions sharing and jointly held insurance policies, or evaluating the entire financial position of a couple and planning for their fiscal future. • PERSONAL INJURY: advisers can help invest the sum awarded, set up a personal injury trust, and ensure income is ongoing over long periods. • REDUNDANCY: advisers can help with tax treatment of redundancy, state benefits, investment, share incentive schemes, PHI and pensions. • EXPATS: (likely to be selling property): advisers can help with property and tax, investment and pensions. LAWYERS FINANCIAL ADVISERS & PLANNERS When it comes to later life, well-constructed estate planning and succession arrangements are becoming increasingly important to the growing number falling into the IHT net. TISH HANIFAN SOLLA