Adviser Insight: Inherent good advice for inheritance

A little while ago I had an interesting referral from a friend who is a chartered accountant. They were a couple approaching retirement and the lady had just inherited some money from her mother. It was around £160,000 and it was more than they had ever had in liquid assets. They needed help and advice to plan for their future at this key time.

After talking to them and undertaking a FinaMetrica risk-profile, it became apparent that they were definitely a low-risk ‘one’ on a ‘one-to-10’ risk scale. This was inherited money and there was no way that the lady was going to risk losing anything that her mother had worked for. They were family-oriented people with a first grandchild on the way, and it was important to them that there was going to be a legacy to leave behind after them. There were no issues with inheritance tax.

The lady was due to retire from teaching shortly, but the gentleman wanted to continue working for a few more years, which meant a reasonable income would continue in the short term. This was helpful as their pensions were fairly modest.

An in-depth analysis was made of their expenditure confirmed that they were people of moderate requirements. A lifetime cashflow forecast showed that they could meet their expenditure on the assumptions we agreed even by just investing the inherited and previously accumulated capital in a high-yielding deposit account and building up their cash ISAs.

This was great news to them; their relief was a delight to behold. I had previously agreed a reasonable fee for my advice so there was no need for them to organise commission-paying investments to be done. Perhaps I could have put up a convincing argument as to why they should consider investing in certain other products, and of course they still have to be wary of key factors such as fluctuating inflation or interest rates. But the couple have much greater peace of mind from not investing in assets that can fall in value even after our discussions on investment issues.

Additionally, they know that if either or both of them need care then this could be a major problem, as it is for so many clients. I regret that there is no longer a choice of products on the market to make advance provision for care costs. I hope that the industry and the legislators find a way to address this whole issue before too long because of the implications to society.

Though these clients might not have been typical of those I would normally seek to advise, they have become great advocates for me and they will undoubtedly be having annual updates of their financial plan.

It has been a great step forward to my business to adopt a fee-based default option for my work even though some clients still choose to use commission to pay for advice where available. Modern financial planning software has enabled me to demonstrate in a much easier way to clients as mentioned here, showing them a reasonable expectation of how their future might look in financial terms. I look forward to helping many more such clients, whatever their wealth, needs and aspirations – as long as they are happy to pay a minimum fee!

Keith Lamley is a chartered financial planner

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