Emma Parkes, client relationship manager, Church House Investment Management reflects on how the fiduciary responsibility of professional advisers can extend far beyond advice on financial matters in order to develop long term client relationships based on trust.Â
Any life-changing event, sudden or not, can have huge implications on an individual’s financial stability and mental wellbeing. This could be a bereavement, separation from a partner, job loss or retirement, a house move, or even an addition to the family – joyous as that can be.
During such an emotionally charged time it can be difficult for the client to think beyond the end of each day but it’s imperative they take some time to do just that. The first step for advisers is to arm them with information – as much of it as possible.
The bigger pictureÂ
If an investor is in a committed relationship, it could make sense for them to set aside regular opportunities to go over collective finances, and discuss how upcoming changes are likely to affect them. If the changing circumstance is intergenerational, it helps if there has been some planning and transparency around financial affairs well in advance.
If a separation is on the cards, and is too antagonising for collaborative effort, then professional mediation is a sensible step. And here intermediaries can prove invaluable.
Through the divorce process, and when working towards a settlement, clients should avoid thinking only of the near-term immediate needs of themselves and any children. If there are children in the equation, then it could be a savvy move to ensure Junior ISAs and self-invested personal pensions for the kids are provided for in the settlement. Likewise, any savings put aside for future education for children could be ring-fenced.
Situations which lead to an investor coming into a lump sum of cash can present their own challenges. Having to figure out how to best use that lump sum can be a tricky balance to strike, especially in the immediate aftermath of receiving it, when longer-term financial wellbeing might be the last thing on their mind.
It is important for investors to be realistic about the lifestyle they and their family can afford during various life stages and how they are planning to meet any income needs to pay for it. Here intermediaries can provide helpful counsel. Keeping a lump sum in cash is unlikely to fit the bill here and investing in other assets could be a good way to ensure maximum longevity from any lump sum received.
The near-term realities of getting to the end of each month with some cash in their pocket come first but beyond that if clients can afford to think about the future, they must confront it.
The role of advisersÂ
Financial advisers and wealth managers have an important role to play here as stewards of their clients’ financial security. Part of that fiduciary responsibility is to lend a listening ear and to have balanced and realistic conversations with your clients. It might be hard to hear at the time but over the long-term they will thank you for it.
Mental health training for staff members who are client-facing, and even those who are not, could help ensure your business operates in the most empathetic way when individuals are going through times of strain. This not only benefits clients through caring and responsive service but should also build your reputation as a company people can trust – through the good times and the bad.
Emma Parkes, client relationship manager, Church House Investment Management
