Legal & Financial Working in Partnership

Working in Partnership – getting more referrals

Why I believe Independent Financial Advisers and Solicitors should be working more closely together. Financial Advisers often have a privileged position with their clients, we often will be meeting with our clients every year as we tend to be paid for ongoing servicing and management. Compare this to solicitors who often only work with clients on a transactional basis when something might change in their life, such as divorce.

For this reason, I believe financial advisers get to understand and assess a client’s circumstances on a more regular basis, as such I think financial advisers get to know when a trigger might justify a referral to a solicitor. I think the best example I can give presently is with pension freedoms and drawdown pensions, many clients are now opting for a pension that they can drawdown as opposed to taking an annuity, which provides an income for life.

With this extra freedom comes greater flexibility but also greater risk, managing how much income should be taken each year based on market movements is a critical part of the financial planning process, but where does a solicitor come into it? Well, we often see that within a family unit one person will hold an overweight amount of pension, once a pension is in drawdown what if that person loses capacity? The family unit that is dependent on that drawdown pension may no longer be able to make changes to the income amount and or take ad hoc lump sums because the person who the pension belongs to, is no longer able to make financial decisions. This loss of capacity doesn’t just have to be because of old age and mental health issues such as dementia, it could be something that happens early on such as an accident.

For this reason, I work closely with clients looking at drawdown to make sure they take the correct precautions, for me this includes a power of attorney to ensure this flexible movement of cash can continue to happen now and in the future.

This is just one part where we should be working with our colleagues in the legal world to ensure our clients have a holistic plan that protects them and their families.

Many advisers like ourselves now also use technology to enhance the client / adviser relationship, one part of this for us means that clients can go online whenever they want and update their fact find details, such as adding new cash accounts or updating their financial dependents – this is often a trigger for us to contact the client to discuss the change in circumstances (where an annual review is not imminent). Knowing these changes, we can take appropriate action, a new child would prompt a protection review, but it could also be another trigger for us to refer the client to a solicitor to see if changes need to be made to their Will and or trust planning.

Likewise, solicitors are there at some of the biggest movements in a client’s life, often this involves money and so it’s important that clients get the right advice at the right time. Working with an independent financial adviser I believe gives you the peace of mind that your client is getting the best unbiased advice, which ensures the clients interests are put first and not that of a financial product provider.

For those interested, we’ve put a mini documentary together about the real value of financial planning available to watch on YouTube:

Robert Lewis

Co-Founder Celtic Financial Planning Ltd

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