Advisers need to take care that they engage effectively with other professionals, or risk unravelling their clients’ financial plans, according to one risk specialist.
Mark Everingham, an Accredited Estate Planning Strategist, Life Risk Specialist and Certified Financial Planner based in Brisbane, warned advisers that they do not work in a vacuum, and should look to collaborate with other professional service providers, such as accountants and lawyers, to deliver the best advice for their clients.
“Each professional has an impact on the other. If you do things in isolation it can undo someone else’s plans,” he said. “But partnering with fellow professionals and working with a collaborative approach to the advice process provides the best client outcomes.”
Mr Everingham observed that many clients will already have a relationship with an accountant, and possibly a lawyer, before they come to see a financial adviser. If the adviser fails to position his or her advice upfront with these other professionals, they may hit a roadblock when it comes time to implement the plan.
“You may find they counter your recommendations to the client, or look to bring the work into their own shop (if they have their own financial planning division or insurance specialist). Or they may simply not trust you with their client,” Mr Everingham said.
“Be mindful of the fact that the client may have been working with their accountant for quite some time.”
If you do things in isolation it can undo someone else’s plans
He also warned against relying on the client to position the advice:
“Don’t rely on the client to position your advice for you. They may not understand the complexities of the plan you are looking to implement, or be able to clearly articulate the value you as an adviser are bringing to the relationship. Or they may just not bring it up with their accountant or lawyer at all, which can make it harder down the track when you’ve already started on the path to implementation.
“Put yourself in the client’s place – wouldn’t you expect that all your professionals would work together to deliver a solution that’s in your best interests?”
As a life risk and succession planning specialist with over 10 years’ experience, Mr Everingham said he had seen numerous situations where an adviser’s best efforts had created additional problems for their client, simply because the adviser failed to engage with the other professionals who were working with that client.
“The simplest example of where we (as advisers) can create problems for the client by not engaging with their other professionals is housing insurance via superannuation,” Mr Everingham said.
Don’t rely on the client to position your advice for you
“If you’ve got a self-employed person, and you set up an insurance policy owned by the insurer’s masterfund, and the client makes a contribution via their business to pay the premium, that counts towards their concessional contribution limits.”
Mr Everingham warned that if the client fails to notify the accountant that this strategy has been put into place, they may face an excess contribution issue at the end of the financial year.
“When it comes to the year-end tax strategy, one area that every accountant looks at is ‘What can we contribute to super to reduce the tax bill?’
“If the accountant is not made aware of the strategy you’ve put in place, you can create an excess contribution issue, and the client is then looking at both professionals wondering who is at fault.”
Mr Everingham shared his tips on engaging with other professionals as part of a Masterclass at this year’s FPA Professionals Congress. We have summarised a number of them below…
Adviser as facilitator
One of the ways advisers can build up strong relationships with other professionals is to act as the central facilitator or project manager for the client. This is a model which Mr Everingham regularly employs in his own business.
“It became apparent to me, working with other professionals, that no-one was really willing to put their hand up to keep the client accountable and make sure that everything that needs to happen does.
“It’s not that other professions can’t take on this role, but in many cases the financial adviser is in the best position, because we know the most about the client and can have the ‘uncomfortable’ discussions. We already know about people’s medical histories, their family structures, their other affairs, so it seems to be a natural progression of what we’re talking to them about to then bring up the succession planning discussion.”
Engaging the right professionals
Mr Everingham also recommends engaging the right professionals for the job. As an estate planning business, he says his firm often seeks out the services of a specialist lawyer.
“Succession law is a highly specialised area, and not every lawyer understands the complexities and issues. So the clients’ current lawyer may not actually be the best person to help with their estate plan.
“It’s a matter of finding the right people to surround the client to provide them with specialist succession planning advice; no one person can do it on their own.”
Consistent advice model
Mr Everingham says having a consistent and methodical approach to the way the business delivers advice is paramount.
“If an accountant is referring a client to us it gives them a lot of comfort to know that we have a consistent approach to doing things. There is a methodology to how accountants and lawyers deliver their advice – they like process and structure – so if you can show that your business is process and structure driven, then you’re all speaking the same language.”
What Mark says here makes sense. The time needed to make these connections is a factor, but it’s the right idea to work with significant others (in financial maters) in a client’s life to integrate solutions in his best interests. Good piece.
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