Values questionnaire and compliance tool

As detailed in the report by the Progressive Advisor Movement (PAM), the private wealth industry makes assumptions about clients when it comes to their values surrounding the payment of tax. It is clear that assumptions are also being made about clients’ wishes to grow and retain their wealth indefinitely. Advisors report that they do not have the time to interrogate their client’s values when taking instructions. This is not viewed as time that can be charged for despite being particularly valuable for the client. Consequently, many clients are not giving informed consent to standard advice which may infringe their values. We hope to assist both clients and practitioners by producing a values questionnaire that delves into a clients values surrounding: -  Wealth accumulation - what are these clients' long term wishes surrounding their wealth?  - Tax - how does the client feel about taxation generally? Does this client wish to engage in tax planning? If so, to what extent (e.g. they may not wish to claim tax relief on pension contributions or philanthropic gifts)? Are there instances where tax planning structures need to be dismantled? Does this client wish to claim state benefits? - Risk - there are numerous tools that assess a client’s risk appetite and these are usually based on asking questions surrounding the client’s wishes in connection to minimising financial loss and maximising financial return. There is no consideration of other factors. A client may be prepared to accept a low or even negative return if they can obtain a greater impact. That same client may not be prepared to accept that lower return if the investment’s impact is less favourable.  We believe that developing a prototype tool with expert support from a known existing provider (e.g. Oxford Risk is a leading behavioural finance fintech firm), will open up discussions between clients and their advisors and ultimately lead to progressive clients receiving more suitable and tailored advice. The values questionnaire will not dispense with advisors’ discussing values entirely, but will hopefully provide a helpful tool to highlight where additional questions and further probing might be necessary.

We want to create a values questionnaire that can be used across the advisory industry by lawyers, accountants and financial advisors. This will allow them to provide more holistic advice and avoid assumptions being made about a client’s views. In order to make the tool as holistic and effective as possible, the questionnaire will have to be crafted with input by experts. We will also have to ensure that the tool can be used as an extension of existing software/questionnaires which will require expert input.  Long term, we hope the creation of this new tool will be practically significant and will also generate a wider discussion about assumptions and values in the industry. This discourse will assist in pushing for policy changes with the regulators.

Ensuring that advisors understand their clients’ values will enable them to tailor their advice to their client’s needs. We hope it will reduce the likelihood of advisors making incorrect assumptions about a client’s willingness to pay tax or reduce their wealth.