Wiseacre Financial Planners has been established for over 20 years, and despite some ups and downs, its two partners Ben and Gary generally regard themselves as being successful. Their client base is quite mixed, and while they have a number of older clients who require a disproportionate amount of attention for the fees that they pay, the partners feel that is simply a part of the price of being well known for accessibility.
One day Ben receives a phone call from Paul, one of his most highly valued clients who, with his wife Janet, controls assets of about £25m. Ben is surprised when Paul asks to meet him but, unusually, neither at Wiseacre’s office, nor at Paul’s business, but at a well known firm of solicitors. Ben wonders what the reason might be, and as an optimist guesses that Paul is involved in another business deal, which may involve rearranging or perhaps liquidating some of his assets.
On arrival at the solicitor’s office, Ben is shown into a meeting room where Paul is already waiting, on his own and looking very solemn. After exchanging the usual pleasantries, Paul tells Ben that he has asked to see him because he and Janet have separated and they will be getting divorced. He has discussed this with the solicitor who, while having some knowledge of Paul’s finances, felt that Ben as his financial planner would have a better grasp of what assets Paul and Janet have between them and who actually owns what.
Ben cannot cut himself in half to represent both Paul and Janet dispassionately and objectivelyBen says that he is very sorry to hear this news and that it puts him personally and professionally in quite a difficult position. He and his wife had become friends with Paul and Janet, and it would be very difficult, on a personal level, not to take sides and, professionally, almost impossible. Ben cannot cut himself in half to represent both Paul and Janet dispassionately and objectively in advising how they might deal with their wealth, a large part of which comprises a successful and functioning business, in which they have both played a part.
There would be, in the immediate future, many conflicts of interestPaul says that he appreciates there will be some difficulties, but he suggests that perhaps Ben could consider looking after Paul’s side and Gary could look after Janet. Thinking of various immediate difficulties, Ben says he is not convinced, but tells Paul that he will discuss with Gary what he has learned, and together they will consider what Paul has suggested they might be able to do.
Gary is very surprised to hear Ben’s news, particularly Paul’s suggestion that Wiseacre might continue to help plan the finances of both him and Janet, provided that each one is handled by a different partner, and his initial thought is that it really will not work. He does not have an intimate knowledge of their affairs, but there would be, at least in the immediate future, many obvious conflicts of interest.
But while reviewing what might actually be involved, Gary also looks at the fees that they currently charge for this relationship and says to Ben, only slightly in jest, that the loss of this business would mean that he would have to choose between whether to keep his Mercedes or his personal assistant. They will not be able to afford them both.
So is there a way in which Wiseacre can protect some or all of its earnings, while acting with integrity, or must they accept that they can represent one party or the other, but not both? At the moment they have been led to believe that matters between Janet and Paul remain ‘cordial’, but when it comes down to apportioning assets, that may easily change and where might that leave Wiseacre then?
While accepting that having only just become aware of the situation and so, possibly, it is premature to be trying to make a decision,Ben and Gary sit down to consider some possible options. They decide first of all that they must adopt a high-level approach to doing what is right, so at this stage, they must disregard the structure of the couple’s portfolios and the impact that changes will have on it and their initial objectives.
Their discussion leads them to identify four possible options. Click the green button below to let us know what you think Ben and Gary should do.
What should Ben and Gary do?
This dilemma appears in the September print edition of The Review. The results of the survey and the opinion of the CISI will be published in the December 2016 print edition of The Review.