Personal Financial Advisor

Can You Trust Your Personal Financial Advisor Today?

Personal Financial Advisors come in all shapes and sizes and with considerably varying levels of qualifications, expertise and experience. If one is to trust one’s advisor it’s essential to have confidence that one is getting sound impartial advice that is based on a reasonable level of experience and that one’s Financial Advisor is appropriately qualified, licensed and registered. Certainly, if your personal solvency is in doubt, you will also want to be absolutely satisfied that you are dealing with a person of unquestioned integrity. What better person can you go to than a qualified, licensed and practicing Insolvency Practitioner or IP, as the job is often labeled.

The work of an insolvency practitioner is much like that of the dentist. You would expect your dentist to examine your teeth and gums and to assess the state of your oral health generally. You would want your dentist to explain what needs to be attended to, to outline what treatments are available, to clarify how long each treatment will take and to indicate what if any pain is associated with each treatment. Finally you would expect to get an estimate or a quotation, if you like, for the cost of each of the various treatments. The IP must treat you in much the same way if you come to him or her with a financial problem: examine your financial circumstances, set out what needs to be addressed, explain what options are available and outline the cost, duration and effects of each course of action. The need for treatment is usually clear and sometimes urgent and it may involve some pain. Generally however, you the debtor, or financial patient as it were, should be able to say truthfully afterwards: “I’m glad I did that”.

The debtor is not the only one in need of treatment and counselling. Various third parties are or may be affected by the insolvency operation which the debtor undergoes. These include the debtor’s spouse or partner and dependents and of course the creditors. Creditors can sometimes have an inadequate understanding of the role of the IP and may see him or her as an adversary to be confronted rather than as an honest broker to be consulted as they seek to maximize the return to creditors while the debtor seeks to recover his or her financial health.

Creditors can gain from working closely with Insolvency Practitioners. There is a statutory obligation on the IP to advise the insolvent debtor particularly by outlining all of the available options in the process of choosing a solution. Ultimately however, it is the debtor’s decision which route to take. The role of creditors differs depending on the solution being proposed but they can have a major influence on the outcome. For example, if a debtor opts to offer creditors proposals for an Individual Voluntary Arrangement, they can vote to accept or reject those proposals. The various rights that creditors may exercise obviously depend on whether the insolvency process is personal or corporate and such rights are subject to the laws and regulations governing that particular process.

Generally speaking creditors can appoint an IP, remove an IP in whom they do not have absolute confidence and question, put a cap on or restrict the fees charged by the IP, particularly if they feel they are disproportionate. Creditors also have the right to attend meetings and vote on proposals. Such rights apply to corporate as well as to personal insolvency processes. Creditors may also increase the contributions to be made by the debtor, insist on the sale of assets or request that the equity in the debtor’s property be released. They can of course assist the IP by providing relevant information on the insolvent person or entity by for example furnishing proofs of debts, by helping the IP to establish the whereabouts and identification of assets of the insolvent estate, by verifying the historic trading relationship they have had with the debtor and by clarifying their expectations of their future trading relationship with the debtor, if he or she is to continue trading. They can do this by for example forming and participating in creditors committees and thereby seek to increase the dividend on offer to creditors without jeopardizing the likelihood of success of the particular financial process being implemented. Having a positive business relationship with the IP should result in win/win for creditors, debtor and IP alike.

Paddy Byrne 26/10/2011

About National Debt Relief

National Debt Relief belong to a firm of leading chartered accountants who are one of the largest insolvency practices in the UK. We offer a complete portfolio of personal insolvency services in relation to IVA, Debt Management Plans and Bankruptcy. All our debt advice is free, confidential and with no obligation.

Call us on 0800 043 5135 or 028 71 376854 or email enquiries@nationaldebtrelief.co.uk