Here’s the latest installment of Adviser Digest, with a summary of the interesting articles this week. Click on the title to read the full article(opens new window).
In this blog, Kim Bendall of ParaPlanPlus delves into the powers of local authorities to claim ‘deprivation of assets‘ and the implications for advisers and their clients.
To prove ‘deliberate deprivation’ the local authority must prove that the client’s motive for giving away their assets was to qualify for State-funded care. However, citing the case of Yule vs. South Lanarkshire Council (1999), Bendall points out that this is not as hard as you might think.
She highlighted some planning opportunities for advisers to consider including where the need to dispose of assets to reduce IHT can be clearly demonstrated and proven. The importance of documenting why the client has been advised to make gifts cannot be over-emphasized.
This blog by US financial planning Michael Kitces considers a recent research by Morningstar which attempts to quantify the value of financial planning.
In the research titled “Alpha, Beta, and Now… Gamma“ David Blanchett and Paul Kaplan of Morningstar revealed that good financial planning strategies such as optimal asset allocation and withdrawal can improve retirement income by 29%, which is equivalent to generating 1.82% return a year. This is what the authors refers to as Gamma – the difference between the baseline and financial-planning-optimal strategies.
Kitces acknowledged the research is a step in the right direction as it ‘ may open the door to a wave of new research attempting to measure the “Gamma” of good financial planning.’ However, he pointed out a few short comings of the paper, the main one being that the outcomes are heavily impacted by the baseline, which is subjective.
In this article in NMA, Eric Armstrong of Capita looks at considerations for advisers when selecting a platform. While cost and suitability are paramount, there are ‘a number of additional considerations that may not form the basis of advice but could positively impact the level of service an adviser is able to offer their clients.’ These include asset allocation, fund analysis and portfolio rebalancing tools.
In this blog, American business coach Stephen Wershing raises an interesting point about the mistake advisers make when targeting a niche. Wershing wrote ‘a niche is not actually a demographic or a profession or an affiliation. A niche is a need. A successful niche identifies a tribe of people who share a common need that is not shared by the general population. ’
It is common for advisers to base their ‘niche’ around on gender, bank balance (high net worth etc) or life stage (retirement) but unless there is a unique common need, it’s not a niche, it’s the Grand Canyon. It is pointless to define your target market based on the restroom they go into.
I hope you have enjoyed this and hopefully it’ll make you job a little easier! As paraplanners, that’s what we do! As usual, thought and comments are welcome. Enjoy your weekend!