Financial advice businesses, like many others, have had to adapt to how they service their clients during and after the pandemic and this has resulted in the rise of video conferencing. A lot of the norms and formalities of attending meetings have gone by the wayside. Clients have become comfortable, and some insist on attending meetings from the comfort of their own home and doing things they would never have done during an in-person meeting.
During a recent file review, we came across an interesting scenario. The adviser had deliberately chosen this file for us to review so we could provide our take on how the advice was delivered.
The clients were a couple. The advice was provided during an extended lockdown in Victoria. The clients were juggling home schooling and having to continue to work. During the advice presentation, the wife was in the kitchen with an iPad and a glass of wine on the kitchen bench while making dinner. The husband was laying back beside the pool, beer in one hand and iPhone in the other, watching the adviser present their advice from the office.
This scenario raises questions around informed consent.
For example, is it ever acceptable for a client to drink while an adviser presents them with a statement of advice? Should the wife have stopped making dinner? Should an adviser end the meeting and tell the clients that they will present the advice another time? Is this something advisers just have to accept and get used to?
Many years ago, I was employed as a FOS panel case manager and one of the matters that came across my desk involved a client who claimed the adviser took him out to lunch where they consumed a few bottles of wine. When they came back to the office, the client was presented with the SoA which the client signed. When the client lost money he complained.
There is an abundance of case law which basically states a person cannot enter into a contract if they are intoxicated or under the influence of alcohol. The Code of Ethics state, “You may act for a client only with the client’s free, prior and informed consent”. However, in the current file review case the clients did not appear drunk; one was making dinner and the other was laying back by the pool having a beer. It is arguable the wife was not giving the adviser her full attention since she was making dinner, however this was an extremely stressful period and the alternative was to not receive advice at all.
Whether or not the adviser should have rescheduled the meeting is not straight forward. It may not be practical to reschedule the meeting, and no one can force a client to attend a video call in a particular way.
So what can an adviser do in this instance to protect themselves?
- Make careful file notes of what was taking place during the video call. Advisers may even want to record how much alcohol was consumed.
- Continue to encourage clients to not sign anything on the spot until they have had a chance to properly consider the advice.
- Organise a follow-up meeting with the clients to see if they have any questions, have the clients repeat the advice and continue to make good file notes.
- For advisers who regularly present advice to clients via video calls, they may want to consider sending a pre-meeting checklist setting out the expectation of both parties. For example, what the clients can do before the meeting such as, finding a quiet place to have the meeting and a list of what to bring and not to bring to a meeting which may avoid uncomfortable conversations.
- Spell out the risks of being physically present but not mentally present.
- Try to avoid having meetings at times where there is a temptation for clients to want to multitask and consume alcohol.
Ultimately it is a challenge for advisers to get clients to respect and appreciate the advice process. If an adviser has been confronted with this situation before, they may want to reflect on what they can do differently. These challenges have always existed, yet the pandemic and the rise of video calls have presented new challenges.
Ultimately, while advisers should decide on a suitable approach themselves a risk minimisation approach is probably the way to go.
One beer or a glass of wine is not the end of the world, but would this be appropriate if the meeting was held in the office?
This article feels a little excessive. There is a big difference in plying your client with several bottles of alcohol over a long “boozey lunch” and a couple of adults in the comfort of their home having a responsible wind-down drink while they make dinner for their family…
Besides – any client could turn up to any appointment at an office having come from somewhere they were drinking, or sit through a meeting thinking about their shopping list and picking up kids and planning dinner etc. I.e. not giving the adviser their full attention.
Advisers have enough to consider, develop, improve, work on and be concerned with – without having to worry about this issue, which in all likelihood is pretty overstated.
My advice?… Let this one go through to the wicket-keeper and focus on your real issues. Planners are ostensibly sensible people. In the very rare event someone turned up to your office clearly inebriated you’d handle it and this is really no different.