BR Guide Second Edition

Not a day goes by when we don’t read or hear something about client vulnerability. This key Later Life theme is undoubtedly the current focus for firms with wealthier ageing client bases as well as a major theme for the regulator. Most advisers expect that protecting vulnerable clients will become a formally supervised activity by the FCA. So in practical terms what does this mean for the adviser and the firm in providing this extra care as well as a first class service that clients will be willing to pay a premium for? Clients can often become disengaged with their financial affairs – not just because they lack capacity or have health issues but frankly because they have better things to do in retirement. But often retirement can be a time when advice is essential – clients can make risky investment mistakes, overspend retirement funds and sadly become more susceptible to scams. Maintaining your communication and finding the best ways to engage and stay in touch are all part of taking care of your clients. Conversations with clients and often attorneys much earlier than at ‘crisis points’ is how successful advice businesses operate. Later Life advice recognised as a specialist area of advice, well integrated practices and processes to enhance the older client experience are what make a difference not only to market reputation but also to a firms’ commercial value. Larger corporates often struggle to evolve their advice models, especially if they’ve become heavily dependent on technology and automated reporting systems. But, it’s not just what you tell clients but also how well looked after they feel and their peace of mind that matters most. Discussions with attorneys and the older client’s family regarding their wishes and priorities, lifestyle, how their finances are managed as well as medical and care preferences are fundamental but are not always documented as they should be. Since it’s widely acknowledged around 50% of people in the UK show characteristics of potential vulnerability, advisers need to have a real understanding of how to deal with the problems that often arise. Vulnerability can be experienced at different times in life and in different forms so the need for continual reassessment and awareness is key. Thought Leadership IDENTIFYING VULNERABILITY, FINANCIAL ADVICE AND GOOD BUSINESS PRACTICE 84 WORKING WITH VULNERABLE CLIENTS 85 WORKING WITH VULNERABLE CLIENTS LPAs and BR: Key Take-aways for Good Practice • Where the attorney is a beneficiary, requesting permission from the Court of Protection before making a BR investment is not necessarily advisable as the Court is not authorised to give financial advice and may well be unwilling to give approval on the basis that doing so could effectively involve it making an investment decision. • The ruling did not prohibit BR investments, but it did emphasise the importance of the donor’s interests and intentions. • If, before an LPA is activated, a donor has expressed a wish to mitigate IHT or to pass on as much of their estate to their beneficiaries as possible, this might indicate to the Court that the donor would have made a BR investment if they had retained the capacity to do so, this may be helpful should there be any involvement of the Court of Protection. • To avoid doubt, when setting up an LPA, a donor can include information on how they would like their attorneys to make decisions for them including their preferences and instructions. • When considering making an investment for IHT purposes, advisers and attorneys should consider the individual circumstances of the case. • The donor’s best interest and financial security must be the attorney’s paramount concern. Consideration should be given to: whether the investment is of reasonable value relative to the estate; how the investment will affect the donor’s ability to meet their living expenses now or in the future, including in a worst-case scenario; what the donor’s life expectancy is; and whether the investment reflects the donor’s attitude to tax planning before losing capacity. TISH HANIFAN - JANE FINNERTY JOINT CHAIR OF THE SOCIETY OF LATER LIFE ADVISERS (SOLLA)