Roxburgh Securities adviser Steve Blizard

The majority of advisers believe they are under no obligation to help the parents of their clients, according to the results of a Professional Planner online poll.

The poll, which asked whether advisers were obliged to help clients with their parents’ “aged care and Centrelink issues”, received a 65 per cent no vote.

The primary concern advisers cited was the legal and regulatory risk involved in extending services to individuals who aren’t contracted for advice. It is inappropriate to provide financial advice – “first and foremost” – without knowing the client’s specific situation, says Philip Carman, an adviser at Personal Asset Services in Perth.

“It’s really simple,” Carman says. “You give the client advice, you don’t give advice to people who are not your clients. You don’t know who they are and they don’t know who you are.

“It’s just a legal mistake, because if anything goes wrong then you’re completely exposed.”

Alan Tickle, an adviser at Your Heritage Financial Planning in Taree, NSW, agrees that the risks are too great.

“You’ve got to be mindful of your professional responsibilities and the risk of giving ad hoc advice,” Tickle says. “You might not have a view on the best interest of the parent; it’s a separate relationship so you’ve got to draw the line.”

Conflicts of interest are also probable, Carman notes, because the client is commonly in line to receive assets upon the death of the parent.

“It’s a complete conflict of interest with the client,” Carman explains. “Remember, we’ve got a generation of 40- to 60-year-old’s who are sometimes trying to push mums and dads into situations to get their inheritance, so there’s an example of why it’s a bad idea.”

Show me the money

It’s also important that advisers not feel compelled to provide services for free, Carman stresses.

“They’re not paying for it,” he says. “You have no responsibility.”

Steve Blizard, an adviser at Roxburgh Securities in Guildford, WA, says there is “no shortage of people out there who want free advice”.

“There’s this latent attitude that advisers are just sitting around with loads of cash and they should give services away for free,” Blizard says.

Some advisers, he notes, don’t make enough money to afford to give away free services. He cites figures the Financial Planning Association released in May stating that the average ongoing advice fee for a client is $3450 a year and muses, “Maybe if I were charging that, I’d be able to give free services.”

‘Look straight in the client’s eyes’

Tickle says he understands where the 35 per cent of respondents who believe advisers are obligated to help the parents of clients are coming from.

“The relationship with a client…at times you can be a friend as well as an adviser, and you can be a sounding board in a lot of areas,” Tickle says.

Carman, too, says it can be difficult to knock back a client who asks for help in this area. “Out of a sense of good-heartedness, of course you’d be inclined to help,” he says.

While in the minority, 35 per cent is a significant amount. Tickle says many of these perspectives can be traced back to advisers’ natural inclination to use their knowledge to help people with whom they’re involved.

“I can only think that they feel obligated from a relationship point of view,” Tickle says. “There’s a question asked and you’ve got information.”

Tickle says that while he steers clear of providing advice in this regard, he is willing to provide general information and help with “processes”. He takes the view that with things like “how a Centrelink assessment works”, an adviser should have the freedom to relate information that is in the public domain or steer the client in the right direction so they can find out themselves.

Roxburgh’s Blizard agrees that there is no harm in doing things like providing Centrelink assessment forms and explaining how aged care works in general terms. “It depends on what you’re doing,” he says. “You can also act as a nominee.”

All agree, however, that advisers need to be firm in declining client entreaties to provide personal advice outside the scope of the contracted relationship – even if it’s difficult to say no.

“It’s not tough, it’s simple,” Carman says. “You just look straight in the client’s eyes and tell them that their parents are not clients of yours.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
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