Case study: 'He was not your usual client'

Adviser name: Johanna Rooney

Firm name: Platinum Financial Planning

Firm size: 6

Client life stage: Accumulation and planning 

The problem: The client had a unique situation worked abroad (at sea, off the coast of Qatar) as a commercial diver on a contracting / sole trader basis. He did not fully understand his tax and/or residency situation and how either might be assessed by HM Revenue & Customs.

The client had accumulated significant cash reserves and did not know his options for maximising this money from a tax perspective, nor which product solutions would be best aligned to his planning requirements.

Johanna tells FTAdviser: "This client came to me in his mid career. He had some employment-related pension from a previous job, but had always been predominately self-employed in a niche occupation.

"He came to me for retirement planning, and asked me when he would have to work to. He worried that he had left planning for retirement too late - and in the job he was in, he wanted to retire earlier rather than later.

I started looking at his financial commitments and family commitments, which had always been a priority for him, to build up a financial plan. And then we realised this was no ordinary client.

I had to get under the bonnet of all of this.

I would say on the one hand he was financial savvy, with an understanding of basic investment principles, what various asset classes were, the importance of diversification, and an awareness of risk and return, but he had no understanding around tax planning or different products. 

And this was where we needed to add value: he had no understanding of his tax status. He was not your usual client in that he worked offshore, and his tax status was anything but run-of-the-mill.

Add to this I had to write to the provider of his old defined benefit scheme, get the information about it, explain to him what it was worth and when it would pay.

I had to get under the bonnet of all of this, and explain all this to him in layman's terms.  

What was the most complicated aspect of the case?

His residency and tax statuses were complicated, as was the international dimension to giving advice.

When someone works offshore they do not always understand what this means for their tax status. Fortunately for him, he had hired a specialist accountant in the UK. 

The client was based in the Middle East, his accountant was in England and I am in Northern Ireland - that's quite a span. 

While his main residence and his wife are in Northern Ireland, he did not understand what his tax remittance was or how much he was paying. 

The best thing to do was to engage the accountant so that we could work together. It's not something we do often - not every client has such specific requirements, but we do work with clients' solicitors and accountants where need be.

This made the time zone less of an issue - and to be honest, it wasn't a big challenge in the end, as we waited til he was home on a long break so we could go through everything with him in-person.

That said, we did want to make sure everything was handled in a time-sensitive way so that the plan could be in place before he went back to Qatar.

What other obstacles did you overcome? 

Having so many moving parts was tricky. Thankfully the DB pension provider was helpful and we did not have to spend ages chasing them for the information about the historic pension. 

But I have yet to come across an IFA who has a general positive view of providers when it comes to this sort of thing.

Usually it is a time-consuming and onerous task - we ask providers a set of questions and sometimes they come back without answering some of these, so we have to keep chasing. 

And they often have lengthy time frames to which they work.

We did want to make sure everything was handled in a time-sensitive way.

I think the biggest challenge was just meeting his expectations. 

He was mid career and wanted to retire earlier than state pension age so, this was about understanding his expectations, explaining his tax situation, and then doing cash flow planning to help him understand the reality of it.

We had to meet somewhere in the middle. 

What was the outcome for the client? 

We managed to get a plan in place within about four weeks. We did it within the timeframe that he was at home.

I have a supportive team of paraplanners, and we did not have to rely on the DB pension scheme to supply the information before we could move forward with the bulk of the planning. 

Working with his accountant was very helpful, too.

We quite quickly ascertained that some of his options were limited because of the tax situation, so we had to put something in place to provide a blended approach in terms of different tax wrappers.

In the end, we split it out. Because everyone can have a pension if they are a UK resident, even if they have no UK relevant earnings, we were able to set that up to the maximum of £3,600 a year. 

We also looked at an Isa, and explored options about general investment accounts.

He has done more investments with us in the intervening months, even before his annual review is due. And he left me a lovely review on Google and on VouchedFor, which was positive. 

What would be your top tip for someone starting out on their journey to become an adviser?

Always prioritise the relationship over the business, and lean on other advisers and professionals for their expertise in certain areas.

We all do things differently, and it is good to learn from other advisers and to get their views or perspectives. It helps you stay dynamic.