Credo Wealth is proud of an investment process which shuns short-term fads and of taking a holistic view of its clients’ financial wellbeing. The result has been impressive organic growth.
Here, Annabel Bosman, Head of Relationship Management for Julius Baer in the UK, explains the practical steps her firm is taking to tackle this most sensitive of issues.
There were a record half a million over 90 year-olds in England last year and the dramatically ageing population is one of the most pressing issues of our time, posing all kinds of questions about how society is to deal with cognitive decline and long-term care. With 850,000 current sufferers, dementia is now the UK’s leading cause of death and this number is expected to more than double in the next 30 years – meaning millions will need their financial affairs managed with extra special care and trust.
Amid such stark figures, many will be thinking hard about making provision for the care of older generations and, in turn, themselves. Protecting the elderly’s financial wellbeing is naturally top of the authorities’ agenda too: within financial services, the Financial Conduct Authority has explicitly made looking after the interests of this especially vulnerable group a priority, spurring firms – including investment managers – to take a long hard look at what constitutes best practice in this highly-sensitive area. And they certainly have a need, given that the average wealth management client in the UK tends to be in their mid- to late-sixties.
One particular player getting attention for proactively addressing elder care is Julius Baer, the originally Swiss (but now very much global) wealth manager which has been active in the UK since the 1960s. As Annabel Bosman, the firm’s Head of Relationship Management in London, explains, not only has the firm heeded the FCA’s advice to create specific policies around cognitive decline, it has also taken more practical steps to train client-facing staff to catch and deal with these issues.
As Bosman points out, first spotting potential cases of failing mental acuity and then broaching the subject with clients is an area fraught with difficulty and one that might be very much outside of a relationship manager’s previous professional experience. Yet when cases do emerge, the need for decisive – yet sensitive – action is such that cognitive decline is something all investment firms should have on their training and policy agendas, in her view.
“The first challenge for relationship managers is identifying possible cognitive decline, which clearly has a huge impact on your conversations with clients about suitable investment products and ideas,” says Bosman. “You have to be absolutely comfortable that they are cognisant of the risks and specific profile of that particular investment.”
This broad principle, under the 2005 Mental Capacity Act, means clients must understand the information relevant to them, be able to retain it for a reasonable period and then use it to make sound decisions. Yet there are further complications in applying these three tests which make specific training even more essential for financial advisors. While cognitive decline may sometimes be obvious and total, things are further complicated by the fact that individuals can often retain full capacity (and confidence) in some areas, while experiencing significant loss in others. There is also the potential for “social veneer” to mask problems under the appearance of the client having understood all that is being discussed – and subjects like investment risk, lest we forget, can be fairly complex.
Julius Baer’s approach to this thorny problem combines both external and internal expertise to try to secure the best outcomes for clients, Bosman explains. On the former front, over 100 of the firm’s managers have completed training programmes devised by Dr James Warner, a consultant old age psychiatrist at CNWL Foundation Trust and honorary reader in psychiatry at Imperial College London; on the latter, Julius Baer has created clear policies and procedures to ensure no relationship manager is dealing with these issues alone and that no vulnerable clients fall through the net.
As a first step we provide management support for advisors themselves, getting a second person in the room to fathom out whether cognitive decline is a discussion that we need to be thinking about,” explains Bosman. “Then, if we think that is the case, we have procedures to flag this through our systems to ensure we are handling it in a sensitive fashion, but also to make sure we are all well aware of any and all potential risks with that client.
There may be, of course, clients without families on hand to assist and so training of the kind Julius Baer’s staff have received will be invaluable in airing concerns delicately to the individual in question. Yet the nature of wealth management relationships – in that they very often involve working closely with families across the generations – means that such firms are often at a great advantage over more transactional financial services providers, Bosman continues. Really knowing the client and their close relations helps to both identify and discuss cognitive challenges should they emerge, since a second opinion on out of character behaviour is often the key to identifying problems rapidly. Furthermore, the broad nature of wealth management relationships also means the institution is likely to already have excellent connections with other professionals – like the family lawyer -who will need to become involved if, for example, Lasting Power of Attorney needs to be established in the case of sudden cognitive decline.
While invoking powers to take charge of an incapacitated person’s physical and financial wellbeing “after the fact” is certainly not impossible, it is very much preferable to address these potentialities as early as possible, Bosman advises. “We are well aware that ‘70 is the new 60’, but while we should be careful not to categorise clients you also have to be mindful that potential health problems come with age and we simply must factor that into how we manage relationships,” she says. “A sudden transition from speaking to the client, to all trades being transacted on by their daughter, isn’t ideal for anyone. So openness and communication is key.”
That well over half the UK population does not have an up-to-date will in place underscores just how unpalatable people (naturally) find these sorts of conversations. Yet as Bosman points out, neglecting wealth planning issues really just builds up potentially very large practical and emotional problems for the future. Not only does a lack of foresight create legal complexity and limit tax mitigation opportunities, it also robs families of the chance to get real peace of mind. Dementia, like divorce and death are among the trickiest of subjects to take advice on, but are also where the well-advised will have most to gain.
The key is forward planning and, while these are undoubtedly uncomfortable conversations, once you’ve had them, everything is out in the open and things like Lasting Power of Attorney and succession plans are all in place, everyone can relax.
Because of changing demographics, dementia and cognitive decline are facts of life that we would always encourage our clients to broach head-on. These are problems that we increasingly have to deal with, but if we plan for them and are proactive it definitely makes things much easier. Certainly, with our clients, that is something that we look to do.”
Annabel started her career in wealth management in 1997 with Barclays Wealth, before moving on to Citi and Deutsche Bank. She has covered roles spanning from portfolio management and investment counselling before moving into relationship management in 2008. Joining Julius Baer in 2015, she leads a diverse team of investment professionals responsible for delivering tailored solutions to a wide range of clients.
Annabel studied modern languages at Oriel College, University of Oxford and is a member of the CFA UK.
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