One question that can be relied on to make clients squirm is the subject of wills and dying. Solicitors will confirm for example, that many people seem to have a fear that making a last will & testament will tempt fate and accelerate their own or maybe their spouse’s demise. Draft wills have been known to linger on the coffee table for weeks and longer.
It is doubtful then that many people took notice of a recent announcement from the Ministry of Justice increasing the payments to partners and children for intestacy – dying without making a valid will. From 1st February 2009, a spouse or civil partner with children will automatically receive £250,000 compared with £125,000 previously, from the estate of someone who dies without a will. Where there are no children but there are parents or siblings, the amount will increase from £200,000 to £450,000.
In the biggest reorganisation of the Coroner Court system for 100 years, there will be a Charter for the Bereaved and a new post of Chief Coroner for England and Wales.
Note that the above refers to married people not people who live together as a so-called common-law wife/husband and for a nightmare example of what can happen here without a valid will see http://www.georgeemsden.co.uk/2006/05/will-you-wont-you/
The theme of asking big or maybe tough questions is continued at a packed Institute of Financial Planning meeting in the City to hear father of the financial planning movement George Kinder. His book The Seven Stages of Money Maturity is considered a classic and illustrates the evolution of financial advice from commission-based product selling to fee-based advice where products are secondary. His own career started doing tax returns for people and evolved into putting a human side to what can be a very dry subject. Very few people get excited about how much they need to invest in a pension or how much life insurance they or their family might need. But talk to them about what they really want to achieve and you have a very interesting conversation, not to mention it making the adviser feel pretty good when the clients says they feel inspired after a meeting with you. The Hawaiian concept of Aloha is also introduced in his first book and means to inspire or make someone feel better, rather than the more prosaic Hallo or Goodbye meaning. You can see George Kinder here http://www.youtube.com/watch?v=rwJxKbgz9ss
A predictable result of the credit crunch is that people are claiming more on unemployment insurance resulting in premiums going up by 20 per cent in some cases. This so-called Payment Protection Insurance (PPI) is often a “point-of-sale” product sold by lenders at the time of mortgage application. This is cheaper than Permanent Health Insurance (PHI) which pays during a period of illness, but is poor value compared the with latter. The former PPI is an annual contract which the insurer can choose not to renew if there are too many claims whereas PHI cannot be revoked by the insurer, hence its name Permanent Health Insurance. A PHI policy which will cost around a third more, will pay up to retirement or other age if necessary, whereas a cheaper PPI contract will typically only pay for a maximum period of 12 months. A classic case of cheap price but poor value.
First Thursday of the month and it is time for me to get out my financial stethoscope be pensions doctor for a day at one of the group schemes I look after. First is a new employee asking about fund alternatives to the default fund chosen when the scheme was set up. There are > 100 other funds to choose from but only about 4 per cent of employees bother to select a different fund from the default one, so her enquiry is unusual. Fortunately, her query is easily answered with a link from the provider showing the alternatives available, enabling her to select her own fund mix. Second is a long serving employee whose husband is having a major operation next month and she needs to take tax-free cash or Pension Commencement Lump Sum as it has been called since A Day. Her long service entitles to good employer contributions so she will be able to take a little more end 2010 when she finally stops work.
But of more concern to her is the loan her husband took out last year where the payments are a problem. He cannot afford the £280 original monthly payment but can afford £100 a month. However, the lender who is also her banker, has not been very helpful causing her much worry. To save £32 bank charges for each unpaid item they have cancelled the direct debit and to help her, I write down 4 bullet points to be included in her letter to the lender which ought to solve the problem.
Finally in a classic case of unintended effect perhaps, groans from my mortgage colleague remind me of the latest data protection regulations. These mean that once a mortgage has completed, the lender will no longer talk to the broker that introduced the borrower to them in the first place, much to the frustration of the client concerned – YCMIU.