What, if anything, should Karlie do?
Karlie is a financial adviser who had advised George for many years. George and his wife Jan had separate investments, and Jan had her own adviser. Jan ran a successful business but decided to retire early following a brain haemorrhage. George told Karlie that, thankfully, Jan made a full recovery following a successful operation, but decided to retire to pursue a quieter life and enjoy other hobbies.
One day, Karlie is informed that George has passed away. Over the next few weeks, Karlie helps with the transfer of George’s investments to Jan, the sole beneficiary of his estate, and during this time Jan informs Karlie that her own adviser is considering retirement. Karlie is invited to several meetings to present her firm’s services to Jan and her retiring adviser, and is eventually appointed as Jan’s new adviser.
Karlie builds a trusting relationship with Jan over several years. Jan is a wealthy woman, with substantial investments, her own pension and a widow’s pension. She could, in theory, afford to take some risks with her investments, but she is risk-averse and wants to ensure that she has money available for probable future healthcare. Neither Jan nor George had close family, but Jan is keen that money is left to provide for both sets of relatives on her death. Karlie has a copy of Jan’s will, with listed beneficiaries, stored in her file.
Karlie is worried that Paul is taking advantage of Jan, and wonders what to do
It becomes apparent that Jan is lonely, but she mentions regularly that she is wary of gold-diggers. Eventually, however, Jan tells Karlie that she has met someone through a dating app: Paul Goldman, who is more than ten years younger than her. Jan confides that she has already received several marriage proposals from him, even though they have not been together long, which makes Karlie wary of Paul’s motives. However, she does not feel as though it is her place to say anything about the relationship.
After six months, Paul sells his property and moves into Jan’s house. With Jan’s consent, he starts attending review meetings. The couple express an interest in travel – something Jan has not brought up before – and ask Karlie to invest some of Jan’s money in investments with higher returns so they have more available funds to spend on this hobby. Karlie is concerned about this change in approach, but the amounts of money involved are not large, and she feels she would be overstepping her professional relationship if she were to express an opinion on this.
At their next meeting, Jan explains that she wants to leave something to Paul on her death, and Karlie suggests that her pension drawdown might be appropriate. This is agreed, and the paperwork is completed. Jan seems a little forgetful and confused during this meeting, but Karlie cannot determine whether she is simply tired and a bit stressed, or whether this is as a result of the brain haemorrhage that Jan suffered (and recovered from) more than five years ago.
Jan and Paul leave to go on holiday, and very soon afterwards Karlie is surprised to hear from Jan’s pension provider that her access to Jan’s pension information has been removed. Karlie calls Jan, who explains she and Paul are to marry before passing the phone to him. Paul, rather brusquely, informs Karlie that further discussion can wait until he and Jan return in several weeks.
Karlie is worried that Paul is taking advantage of Jan, and wonders what to do. She does not want to damage her relationship with Jan, because (as well as liking her as a person) she is a valuable client, and Karlie has been well-remunerated while advising her over the years. On the other hand, Karlie wonders if this means that she has more of a responsibility to try and resolve the tricky situation Jan is in.
What, if anything, should Karlie do?
A. Things change, and Karlie’s concern is an overreaction. Jan is happy, and still has ample funds in her name. It would not be appropriate for Karlie to take any action at this stage.
B. She should tell Jan that she is not prepared to give piecemeal advice, and that unless her access to the pension policy is reinstated she will have to stand down as a point of principle.
C. She should insist on meeting with Jan alone when she has returned from holiday, and set out her concerns, including how marriage to Paul might affect the wishes she set out when she initially appointed Karlie as her adviser.
D. Karlie should have realised that Jan’s brain haemorrhage made her a vulnerable client all along. It is clear that Paul is now controlling her and, as Jan has no close family, in order to safeguard her interests Karlie should report her concerns to the care authorities.
This dilemma appears in the Q1 2018 print edition of The Review. The results of the survey and the opinion of the CISI will be published in the Q2 2018 print edition of The Review.