I’m not for one minute suggesting all those over a certain age are vulnerable – as the regulator sometimes seems to want to.
However, it is important to acknowledge there is a much greater chance this customer demographic is at greater risk, in terms of both their physical and mental health.
So as advisers, it is imperative to take into account the potential for any health issues, even if the customer sitting opposite you is a picture of health.
If we are cognizant of this greater risk then it raises some very interesting questions about the base requirements for clients, particularly in equity release and a draw down product.
For example, imagine you take a client through the process, recommend a drawdown product and they take an initial sum, but their health deteriorates rapidly and they are no longer able to make the decisions they once did.
For someone completely fit and healthy the thought of such health issues befalling them might seem fantasy, but for those over 65 years old there is a one in three risk of mental capacity issues arising.
It really is the adviser’s duty with all clients to highlight this because if there is no Lasting Power of Attorney (LPA) in place then we are into a rather complex and serious situation.
This is especially so with a drawdown when it comes to accessing the rest of the money and determining when is the most appropriate time to do this.
If your client can’t make those decisions for themselves, and there is no LPA, then what happens next?
Indeed, this can be so devastating for the individual and family that I would suggest advisers should insist on an LPA being put in place as a default position for such clients and products.
It seems to be completely within the terms of best practice to do this and you can imagine the trouble and issues you are preventing if this is simply a natural part of your advice process.
Spelling out the potential consequences of not doing this would, I imagine, be enough to ensure a client is happy to go ahead, even if they might think such a catastrophic loss of health is unlikely.
It provides peace of mind to all and ensures that no unforeseen consequences could arise if the worst does happen.