BRAIN INJURY CONFERENCE 2014

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1 BRAIN INJURY CONFERENCE 2014 Sponsored by Nestor and Kings Chambers Enhancing the client experience: views from a specialist IFA

2 Nestor director and compliance officer Jennifer Stone outlines the company s systems and values and how it delivers its promises to clients. Normally in seminars, we take the opportunity to talk about financial solutions such as Periodical Payments and Lump Sums. At the recent Nestor/ Kings Chambers Brain Injury Conference, I opted to talk about enhancing the client experience instead. So what do we mean by a good client experience and how do we run the company to enhance that? We are Independent Financial Advisers (IFA) and specialise in advising clients pre- and postsettlement in relation to damages for Personal Injury/Clinical Negligence. Nestor currently manages Lump Sum investment portfolios worth over 350 million and cash accounts of around 100 million. We set up about 300 Personal Injury Trusts per annum, and act as expert witnesses in around 150 Periodical Payment cases. We act as IFAs for Court of Protection clients, give advice on state benefits and provide accountancy services. Ninety per cent of our work is instructed by claimants with defendants making up 10 per cent. The company has been established for almost 10 years and being independent, we are not restricted to recommending certain solutions or providers. We are regulated by the Financial Conduct Authority and the emphasis is on outcomefocussed regulation. My role is to identify risk and enhance Nestor s governance, culture and controls. So what does good look like in terms of a business framework and how important is this? Well, if we don t get it right, we reduce the chance of giving the client a good experience. Let s start with expertise. We are often asked due diligence questions but often it s taken for granted that we know what we are doing. We do. In 2012, the qualifications for Financial Advisers increased. All of our team passed Level 4. This is an area requiring specialist knowledge and we are specialists with years of experience who provide consistency of advice. We support and maintain our levels of expertise through supervision and monitoring. We set KPIs and pursue continuous professional development to maintain and enhance competence, service delivery and quality of advice. We also don t want our non fee-earning staff to stagnate; we care for them and want them to care for clients. Nestor tracks all the data required from a regulatory perspective and ensures it s the correct information. There are compliance procedures in place for all feeearners and staff. We maintain good audit trails and we do what we say we are doing for the fees we charge. How do we know we are delivering what we ve promised? What s our advice like? We conduct oversight of advisers both internally and using external advisors. It is a regulatory requirement that one in 10 files are randomly checked to ensure standards are maintained, however we do more than that because our clients are vulnerable people and we have to be sure they are getting the best advice. Nestor is wholly owned by seven directors all of whom are practising financial advisers with Nick Leech in the role of managing director, and myself in the role of compliance officer. The buck stops with us. Since we are not part of a network, we personally answer questions and are involved in every aspect of the governance of the business. This presentation gives you a flavour of the sort of systems and controls we have. And also our values: we will never refuse to help a client.

3 (continued) In support, we need top IT systems to monitor stats and keep us up to date as our data needs to be good. We use outside consultants to provide additional help where required. We also employ an external compliance consultant who comes in monthly and interprets new and existing regulations. And we operate an investment committee to assess and approve existing strategies, new products and vehicles. From a financial point of view, we ensure that we comply with our regulator s capital adequacy rules and that we are getting paid. We can t enhance clients experiences if our accounts are out of order and left unpaid. Beyond a sound business framework, clients need to know what kind of a company we are and what we believe in our softer side. So what are Nestor s values, ethics and skills? Number one is communication. We take away some of the pain involved in dealing with legislation and finance, providing advice in the language that clients and their professional representatives understand. We read all the reports, listen to all parties and empathise with clients. When it comes to making decisions and providing advice, we gather facts, consult with others and look at the big picture, considering all options. We consider a client s values and priorities and ask what does this client really need?. We don t railroad clients down one track: our objective is to give them peace of mind to live their lives. Often we counsel them to slow down and not take longterm financial decisions under pressure because there is so much to sort out in their lives post injury or settlement. We are committed to professionally delivering services and meeting deadlines. We don t have templates for solutions or services and if there is a better solution for a client, we recommend it. At Nestor, the buck stops with us and we accept responsibility if an error is made. That includes financial restitution, meaning we will put the client back into the financial position they were in but for our error. So what do clients value? They want access to comprehensive advice within the specialism a team that can cover everything from Periodical Payments to investments, bank accounts, personal injury trusts, maximising welfare benefits entitlements, and state funded care and support. They want a team that will go all out to fight their corner with a can-do attitude and wide network of contacts. Clients are looking for well-costed investment solutions and know that we squeeze the best deal out of every provider to make every percentage point count. They want us to be creative, solve their problems and deliver financial performances in line with expectations and benchmarks. It s our job not to let them down. Nestor holds regular meetings with each client the frequency of which is decided according to each client s needs. What does a client review look like? First of all, we have a framework that underlines every client meeting. Recently I met with a client, her mum and her professional deputy. The client is 20 years old, the recipient of a clinical negligence award and with a slightly reduced life expectancy. A settlement was made three years ago of a lump sum of 2.5 million to cover care and case management costs with a Periodical Payment paid each year this December it steps up to 120,000 per annum (linked to ASHE th percentile). Since settlement her house has been purchased and adapted with all necessary equipment bought. Here s a brief financial overview: 1,098,572 invested in 7 Investment Management Personal Injury Fund and Discretionary Fund Manager 225,000 in cash deposits - 86,000 of which is about to mature 11,130 in pension In this situation, you might assume that all the meeting needs to address is the upcoming Periodical Payment sum and whether the value of her total investment has gone up or down. At Nestor, client review meetings allow us to really enhance the client experience. In them, we demonstrate on an ongoing basis that we understand the client and acknowledge that situations often change in ways not predicted during litigation and we have to help them meet their financial needs. We can t assume that an investment strategy will remain suitable and we must

4 (continued) always be prepared to review options. Sometimes that includes difficult conversations, for example we may have to tell a client that if they continue to spend at their current rates they will not have enough money for their life expectancy. These are unpalatable truths that are hard to discuss. We also need to look at what s happening on the ground. Our young client above has recently left college so needs more care each year. We explain that her position is sustainable but also there s no cast-iron guarantee that the situation won t change again in the future. We also need to double check the Periodical Payments indexation calculation to ensure she gets the correct sum never assume that this is set in stone or always correct. We also provide advice on utilising the ISA allowance, pension contributions, cash, welfare benefits and help fill in forms. Overall, the purpose of the meeting is to review the situation and to assess whether or not the strategy remains appropriate for the client. More often than not, various follow-up actions are required to ensure the plan remains appropriate to the client s needs. There s no such thing as risk free in this market. Markets are volatile and review meetings also give us an opportunity to explain this to clients with confidence, so we can reassure them that the risk they are taking will help them to achieve their objectives. In fact, Nestor clients rarely panic not even during the financial crisis because we prepare them to see the long term and not to lose sight of what they are trying to achieve. Sometimes a client s situation changes and sometimes their attitude to risk changes. I had a client who was very risk averse two years ago but after the financial recovery, he wanted to take much greater risks. We talked him down the risk scale a bit when we explained the potential consequences of implementing such a portfolio! At Nestor, we are always mindful of the fact that our clients have limited capacity for loss because they can t increase their income through work. It s a great responsibility and that s why we strive to do the best we can for clients and we have a robust approach to governance and control. In summary, good client experiences are less likely to consistently occur in today s highly regulated environment if any element of the underlying framework of the business is flawed. We strive to be the best business we can for our clients and professional connections. The best way of achieving that is ensuring a robust approach to our culture, governance, and controls. We sincerely believe that quality outcomes for clients flourish best in a wellmanaged business.

5 Controlled House, Waterfold Business Park, Rochdale Road, Bury, Lancashire BL9 7BR DX Bury T F E info@nestor.co.uk W nestor.co.uk The information contained in this newsletter is for illustrative purposes only and should not be relied upon. The figures quoted will vary according to each individual case. Specific figures and costs are discussed at the outset of each instruction that is dealt with by Nestor. This newsletter is for general guidance only and represents our understanding of law and HMRC practice as at April Tax and benefit legislation/regulation is liable to change. Nestor is a trading style of Nestor Financial Group Limited which is Authorised and Regulated by the Financial Conduct Authority. FCA Reg No and registered in England & Wales No Vat Registration We take great care to ensure that Nestor complies fully with the guidelines set by the regulatory bodies within the Financial Services industry. No information contained on this publication should be construed as an offer or invitation to invest. Investors should be aware that the value of investments is likely to rise and fall over time and cannot be guaranteed. Past performance is not necessarily an indication of future performance. The Financial Conduct Authority do not regulate deposit accounts, Personal Injury Trusts, Periodical Payment advice, Taxation and Trust advice