Intimations of mortality 

What a sad week it has been.  First of all, the news that Victoria Wood had succumbed to cancer at the age of 62, and then, yesterday, we heard that 'Prince' (or 'The Star Formerly Known as Prince') had passed away in a lift.  I, for one, am unlikely to be joining the throng of Prince's tearful, grieving fans, but I must confess that the news about Victoria Wood felt a little more like losing a member of one's family.

Prince was 57 and therefore there are implications in his sudden, and apparently unexpected, demise for gentlemen of my own age.  I would never have guessed that Victoria Wood was five years older, but that may have been as much to do with her winsome, youthful brand of humour as anything else.

This kind of news is sad because it marks the passing of the very public participants in our own generation, and because we are denied access to the future fruits of the undeniable talents of these people.  Such events ought to make us reflect upon our own mortality and the way in which we assign priorities to the possibilities and activities of life.  They also ought to make us think again about how we do financial planning.

Both individuals are the exceptions to the mortality statistics that are the raw material of our own profession.  Victoria ought to have survived a further 27 years, and Prince a further 29 years, based upon the 2015 data-tables.  As we map out our client's cashflows, it is these kinds of assumption that get factored into the model - and whilst we may stress that we are only using cohort life expectancies, if we are not very careful we may begin to think that each individual has a kind of 'right' to these prognoses.

And both of these cases prove that you cannot rely very much upon cohort data.  Without evidence to the contrary, we might safely assume such life expectancies when mapping out a version of the client's financial future, for example when computing how long a drawdown fund is likely to last, but the premature loss of both public figures, as well as those within our own close families, teach us (again!) the vital importance of 'What If?' scenarios.  I doubt very much that Victoria Wood or Prince's dependants will find themselves left in penury as a result of their bereavement, whereas there is a much higher probability that your own clients will find themselves in positions of financial fragility in similar circumstances, because most 'normal' people are not in a position where the accrual of necessary capital may be accelerated.

For the Princes of this world, perhaps those 'What If?' scenarios are a kind of icing on the cake for their financial-planning (perhaps to reduce the impact of IHT on an otherwise enormous estate), but for many of your clients, this planning is the thing which makes the difference between an estate, and no estate.  The realisation of this ought to impact upon our own professional practices - for example, the client who comes to you with a perfectly justifiable concern about their pension-planning, whilst simultaneously betraying a not inconsiderable aversion to reviewing his or her family protection provisions.  The financial-planner is no mere order-taker, and the commitment to 'What If?' scenarios seems to me to be tangible proof of your commitment to the client's ultimate best interests.

Whilst we grieve the loss of Victoria Wood, and our sympathies go out to her family, the reality is that we, as financial-planners, have the capacity to make a huge, concrete and positive contribution to the wellbeing of our clients' families and dependants.  Are we?

Kevin Moss, 22/04/2016