Socially responsive advising

As trust and estate practitioners, we remain ready to sell our services or solutions to our clients. For those engaged in responding to their client’s estate management objectives, we need to remember that we are agents for change in the life or operation of our clients, not merely the provider of service results. If our business is optimised to provide maximum satisfaction to clients, then engaging comprehensively with the values and objectives of the client (unless prevented by client direction) has to be the objective of initial client engagement.

Each day, with each new client brief, estate advisors across the professions must walk an ethical balance beam when engaging with their clients in deciding how their professional practice approach meshes with the expectations and needs of their clients.

The challenge

We live in a world where ‘sustainability’ has an extended meaning across many geographies and cultures. Client concerns about climate change, health, longevity, financial stability and standards of living abound. Both commercial interests and private clients seek to engage with social and community issues as they operate their affairs. Clients who hold themselves accountable to social and community outcomes are a frequent feature of estate advisor engagements.

Whilst many clients are self-directed in their activities, increasingly they are seeking help from their professional advisors as they seek to satisfy their social contribution objectives.

The pursuit of social contribution is often triggered by social responsibility commitments1 in business or a significant life event for a client such as:

• impact of a natural disaster, such as flood, drought or fire
• the tragic loss of a loved one
• the receipt of an inheritance or a windfall
• a commercial or investment sale that creates substantial gains
• caring for a disabled family member, or
• pursuing social contribution as an occupation post-retirement.

Social contribution advice is not an area of work for all advisors. Indeed, without an appropriate professional relationship already in place, some advisors may never be asked to assist their clients with this work.

In responding to these client objectives, advisors need to establish whether the priority of their client is in making their contribution during their life or normal commercial operations, or after the death of an estate holder, or a combination of both. Ideally, the appropriateness of these choices needs to be evaluated with the client as part of the estate review engagement.

Clients look beyond technical ability

How advisors present themselves to clients will in large measure determine how a client perceives the value the advisor can be to them. There is no single ethical model of professional practice.

The legal profession provides some useful exemplars that are relevant to other professionals in the estate advisory sector. A recognised breakdown of the ethical modalities of legal practice is as follows:2

• An adversarial advocate. The advocate of the client’s interest above all else, other than the duty to the court and rule of law.
• A ‘responsible’ lawyer. This person shows autonomy from clients and private interests to provide impartial representation. This practitioner places the rule of law as the touchstone to which the client’s affairs must respond.
• A moral activist. This person promotes social and political justice.
• A relational lawyer. This person takes responsibility for people, communities and relationships. Relational lawyers are characterised by serving the best interests of clients and others in a holistic way, which incorporates moral, emotional and relational dimensions of a problem into legal solutions.

Estate advisors need to reflect on how these methods of practice apply to themselves and their scope of professional responsibility. In my experience, estate advisors are most effective when their personal values and their ethical model of practice coincide.

Where clients are seeking to implement or change their social contribution strategies, it is estate advisors at the moral activist or relational lawyer end of the spectrum who are most successful in attracting and holding this work.

Estate and wealth advisory firms who want to grow the socially responsive dimension of their practice need to consider how they ensure the right type of advisors are engaged to this practice. Being a big biller or a great networker will not generally be enough. Clients will normally want to work with the advisor with whom they feel the greatest empathy; technical ability comes second.

We must ask ourselves: what is the client really asking for?

In our engagement with clients we must identify ourselves as advisors and listeners, not just technical service providers. Our primary role in this work is to help clients evaluate relevant choices for the management of their affairs that can achieve their objectives.

Again, turning to the practice of law yields a useful analysis framework that, while recognising the reserved nature of legal work that must be protected, provides a tool against which the professional role and responsibility of non legal professional disciplines can be analysed.

The lawyer’s role

Client needs can normally be satisfied when lawyers, as appropriate to the engagement, carry out the following:

1. Assist with analysis and interpretation of legal and factual issues.
2. Assist with the enforcement of legal rights and obligations.
3. Asisst with the authentication and assurance of title to property of any type.
4. Assist with the planning and management of a client’s legal affairs.

Non-lawyer advisors are normally involved with the non-legal aspect of this work. Discerning the boundary lines between professional roles can, however, be difficult in day to day practice. All estate advisors can, as appropriate, engage with the social and community contribution objectives of their clients.

Client objectives also need to be understood. In estates practice these can normally be classified as the following:

1. Personal and family representation and succession.
2. Family continuity, governance and legacy.
3. Estate preservation, enhancement and transfer.
4. Business ownership, operation, succession and control.5Financial security and legal compliance.

Socially responsive estate advisors need to be active listeners if they are to pick up the underlying message from their clients about their objectives, as well as their needs. Once their objectives are understood, the services that assist in achieving them can be identified. This may include some or all of the following:

1. Give advice. The function of being an authoritative source of knowledge and choices for evaluation by clients. (And as appropriate by a lawyer, the interpretation and application of laws and legal principles).
2. Perform transactions. The function of authentication and assurance of title to property of any type (usually the role of a lawyer or conveyancing professional) or the provision of any other appropriate professional service result.
3. Carry out representation. The function of representing the rights and interests of clients, particularly in situations of conflict (often, but not exclusively, the role of a lawyer).
4. Design. The function of planning, designing and documenting structures, strategies and arrangements which regulate rights between parties (the regulation of legal rights and responsibilities remains the role of a lawyer).

A revised language of engagement

First contact

An existing client calls you and says she has just received an inheritance of AUD1 million dollars from her great aunt and asks if she can come in and talk about this event and how she should manage it. The client says her aunt was a supporter of a charity for many years. The client says that she wants to do the right thing by herself and her family, as well as continuing the good name of her great aunt.

First considerations – the ethical balance beam

Consider the following questions when faced with this situation:

• Who is my client?
• Who else will be affected by this work?
• Am I the best person to help with this matter?
• Why is the client asking me for help?
• What does the client want to achieve?
• Can I, or my firm, deliver what this client needs?
• To whom is the client accountable? Why?

First decision

Because this is your largest commercial client, who spends AUD100,000 per year with fees and with whom you have a great working relationship, you agree to the meeting.

Second decision

You bring into the meeting Guy Green, a lawyer who is a trust and estate specialist and a member of the Society of Trust and Estate Practitioners (STEP).

Outcomes

Guy outlines the key choices the client has about lifetime and bequest based giving. He also explains that she can use her business interests to also assist in furthering her community work as part of its sustainability strategy and community brand building objectives. The client agrees to a combination of lifetime and post death gifting strategies involving both herself and her business.

Conclusion

Leadership of a client is a valuable professional asset. The professional closest to the client should retain that role and build on that relationship capital with the client by drawing into the engagement further specialists with the technical skills to assist. It is the combination of both these skill sets that creates the most value for clients.

Responding to our client’s social and community accountability is simply part of our role as estate advisors, along with responding to the issues of:

• active business interests,
• non-business investments held in wealth management structures,
• personally owned property,
• family, stakeholder and legislated accountability.

It is engaging with this full range of issues as part of our initial engagement with clients that we are involved in socially responsive advising.

• 1For examples, see www.corporate-responsibility.com.au and www.bitc.org.uk
• 2Inside Lawyers Ethics – Christine Parker and Adrian Evans (Thomson Canada Limited 2003).