BR Guide Second Edition

Andrew Swallow CFP TM Chartered FCSI FPFS of Swallow Financial Planning LLP, a Chartered firm of Financial Planners, recently gave us an overview of how his firm keeps the needs of vulnerable clients at the forefront of its advice proposition. The core business of Andrew’s practice is financial advice to the those in middle and later life and his firm’s ethos is advice first, product sales second. He says, “if you follow that mantra you cannot help but adapt your approach to give the client the very best advice outcome.” He and his colleagues take this responsibility to their clients seriously and Andrew considers that every client could be vulnerable when they are relying on advice regarding topics they have no knowledge about. He’s seen client vulnerability first-hand, and the impact of changing circumstances. He describes, “a client who I had dealt with for 20+ years. After his wife died he lived on his own and over a period of several years I witnessed he was struggling in the way his home was kept, in his understanding of our discussions and even in his preparation of food. Eventually I “took the plunge” and contacted his daughter informing her that in my opinion he should not be on his own. As a result, we helped manage the sale of two homes, the purchase of a new property with a “granny” annexe and the re-organisation of my clients' affairs to fund help for him and to facilitate his living with his daughter and grandchild.” Two factors have brought these types of issues into sharper focus and led Andrew to actively engage with additional training in the way his firm identifies and deals with vulnerable clients. He says, “firstly my client bank is getting older and hence the demand for advice in the later life area was increasing and secondly I dealt with my own parents who died in the 1990s and therefore experienced first-hand the issues of losing one’s physical and mental capabilities. I was shocked by how little help and advice was available.” Age, though, is just one of the things to be aware of in order to safeguard the client. Andrew cites grief as something to watch out for as well as conversational cues such as, “I’ve just been discharged from hospital”, “I receive Attendance Allowance”. Then there are behavioural signs such as looking and sounding stressed, repeating the same questions or relying on an unauthorised third party. Swallow Financial Planning has now reviewed its practice and looked at the language used when communicating with its clients, from advice to publications, including its website. And when it comes to do’s and don’ts of working with potentially vulnerable clients, Andrew has some good tips born of training and experience: Andrew Swallow Swallow Financial Planning LLP 83 82 WORKING WITH VULNERABLE CLIENTS WORKING WITH VULNERABLE CLIENTS How and Why Advisers Should Build More Awareness of Vulnerable Clients into Their Advice Proposition CASE STUDY • Don’t rely on written communication, follow up with personal contact. • Try to write without too much jargon (not always easy!). • Summarise the minutia to focus understanding. • Provide larger font or other aids to understanding. • Involve trusted family members. LPAs and BR In cases where an individual loses the ability to make sound financial decisions, an attorney may have been appointed by an Enduring or Lasting Power of Attorney (LPA)*. An attorney will generally need court approval to be able to make a gift of a client’s assets for IHT planning, as this is effectively giving away assets. The general view has been that court approval is not required to make BR investments, as such investments do not involve making gifts, unless the attorney is a beneficiary of the estate, in which case there is an obvious conflict of interest. A 2016 case sheds further light on the situation: the Court of Protection’s approval was sought retrospectively for a large gift which was made by the son-in-law of the subject of the LPA as her attorney. He used some of the money to buy a property. In addition, after taking advice from a financial adviser, he made a sizable BR investment with money from the estate. Since there was no evidence that the subject of the LPA was concerned about IHT planning or giving large gifts, the Court held that neither the gift nor the investment was in the best interest of the estate owner. The attorneys were removed and a deputy was appointed in their stead. The son-in-law was also ordered to repay just over half of the £324,000 gift back to his mother-in-law. However, despite the judge’s ruling that the BR investment was not in the best interests of the owner of the estate as its primary purpose was for the saving of IHT which would not benefit her, the BR investment was left intact and in her ownership (albeit to be reviewed by the newly appointed deputy). The judge noted that, “there has been no allegation that the investments in the IHT schemes constitute a breach of duty. The attorneys took advice from a reputable IFA at a reputable firm; there is nothing wrong with that even if another attorney would have made a different decision. While there were high start up costs the investments have now increased in value.” • DON’T talk over the heads of vulnerable people ignoring them in favour of attorneys etc. • If it’s a “bad” day come back and try for a “good” day. • Ask and encourage questions to gain feedback on understanding. • DON’T rush them, go at their pace not yours. • Have meetings in an environment the client is comfortable with, sometimes that is their home rather than your office. ANDREW'S TIPS * Enduring Powers of Attorney were replaced by Lasting Powers of Attorney on 1 October 2007.