This was the question leading an article on the front page of the Money section in the Sunday Times yesterday.
The article was prompted by a Financial Ombudsman Service ruling, which found restricted adviser St James’s Place had provided unsuitable advice to a client living with dementia, in respect of an ISA transfer. You can read the final decision here.
The article in the Sunday Times raises some important points about financial advisers who are working with vulnerable customers, especially those who are living in residential care home or who have Alzheimer’s disease.
As an independent financial adviser who specialises in care fees planning, and is often working with vulnerable adults and their families, I want to share a few thoughts on this important subject.
The Sunday Times article was published at an interesting time, as on Friday afternoon two more of my team had attended a Dementia Friends information session in Cranleigh.
We are encouraging all of our Financial Planners and back office team to become Dementia Friends after attending these one hour awareness courses which are designed to offer an insight into what it is like to live with dementia.
Something else we do at Informed Choice is to publish a set of Later Life Client Procedures, which we share with every later life client.
As you will see from the 15 points described in this document, the procedures are designed to make sure our most vulnerable customers are treated fairly, and with the dignity and respect they deserve.
Our regulator, the Financial Conduct Authority (FCA), has been doing some good work in this area too.
Back in February 2015, the FCA asked us to participate in a video about financial services and vulnerable customers, created to launch an an Occasional Paper on Consumer Vulnerability.
The video, which features Informed Choice’s Nick Bamford, highlights that some vulnerable consumers seeking help from financial providers are meeting ‘a computer says no’ approach, putting them at risk of further detriment.
Also featured in the the video were the FCA’s Martin Wheatley, Macmillan’s Lynda Thomas, Nationwide’s Graham Beale, MoneySavingExpert’s Martin Lewis and Barclays’ Ashok Vaswani.
After reading The Sunday Times Money article about St James’s Place and customer vulnerability yesterday morning, I noted a few questions I believe are important to ask whenever a financial adviser is working with someone living with dementia.
1 – Is the adviser an Accredited Later Life Adviser?
LLA Accreditation is a recognised benchmark of the advice skills of advisers who advise in the older client market.
Offered by the Society of Later Life Advisers (SOLLA), the accreditation has been shaped following consultation with consumer groups and those actively involved in advising in the older client market.
My professional opinion is that no financial adviser should work with an individual living with dementia unless they are a full member of SOLLA, holding the Later Life Adviser Accreditation.
2 – Is the adviser a Dementia Friend?
A Dementia Friend learns a little bit more about what it’s like to live with dementia and then turns that understanding into action.
Whilst the information session only lasts one hour, it is a powerful experience and a good starting point for developing a deeper understanding of some of the issues associated with living with dementia.
If a financial adviser is working with someone living with dementia and they are not a Dementia Friend, it raises some serious questions about their commitment to delivering suitable advice to that individual and their family.
3 – Is the adviser an independent financial adviser?
Financial advice firms can be either independent or restricted.
In order to call yourself an independent financial adviser, you need to provide unbiased and unrestricted advice based on a comprehensive and fair analysis of the market.
Because only independent financial advisers can act in the best interests of their clients, you should always choose an independent financial adviser to work with someone living with dementia or in an otherwise vulnerable situation.
Restricted advisers can only recommend certain types of product, or advise you on products from one or a limited number of providers, and therefore working with a restricted adviser severely limits the ability of the adviser to deliver advice which is in the best interests of the client.
4 – Does the adviser charge fees for their services?
Since the start of 2013 and the abolition of commission payments for retail investment products, all financial advisers (independent and restricted) should be charging fees for their services.
However, some restricted advisers continue to operate with a so-called ‘vertical integration’ business model, where one charge covers the cost of the product and advice.
Some independent financial advisers have failed to move very far from the old commission remuneration structure, charging a percentage of any investment amount or a fee which is contingent on the sale of a financial product.
The way in which you pay for financial advice can have the unintended consequence of influencing the outcome of that advice, so consider this very carefully.
Only an independent financial adviser charging a genuine fee for their advice (and not contingent on the implementation of a financial product) should be working with vulnerable customers and those individuals living with dementia.
These four simple questions, which should be asked in addition to the usual due diligence questions about regulatory status and financial standing of the firm, should help to identify a financial adviser who is able to provide suitable advice in the best interests of a vulnerable customer or someone living with dementia.
We hope to see more from the Financial Conduct Authority in the near future to describe best practice when working with vulnerable customers, in terms of the status and approach taken by the adviser.