Mr Ng: Capacity, a Daughter's Pressure and a Commission at Stake
Mr Ng, 82, had a stroke four months ago. His hospital discharge summary records "mild cognitive impairment, may fluctuate". He owns a flat worth HKD 9 million, a single-premium life policy with an HKD 8 million death benefit currently payable to his two children in equal shares, and HKD 4 million in deposits. His daughter from his first marriage, Ada, has brought him to your office twice. She wants him to change the policy beneficiary to her alone, sign a new will leaving everything to her, and invest HKD 5 million in a single-premium investment-linked policy sold by a friend's brokerage, on which your firm would earn a 4% commission. Ada has offered you HKD 50,000 "for your time". Mr Ng is quiet in meetings, twice asks where he is, and defers every question to Ada. His son in Toronto telephones and demands a full list of his father's assets and a copy of the policy.
1. How should you handle the beneficiary change and the new will?
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My role is to protect the client's autonomy, not to facilitate the family's timetable.
The threshold question is capacity, and I am not qualified to answer it. Capacity to make a will is a legal test, and capacity to make a gift or a substantial investment is a separate question. What I can do is record and act on the warning signs: a documented fluctuating cognitive impairment, disorientation as to place, and complete deference to a family member who is also the main beneficiary of the proposed change. Those facts require a medical assessment before anything is signed, obtained independently rather than through Ada.
Operationally: meet Mr Ng alone, in a setting where he is not prompted, and document what he says in his own words. Ask whether he has made an enduring power of attorney; if one exists it must be registered before it can be used, and if one does not, that is a separate conversation for a client who still has capacity. Decline to witness or arrange the beneficiary change while capacity is unresolved - a beneficiary nomination signed by a person who lacks capacity is a lawsuit waiting to happen between the two children. Refer the will to a solicitor; I do not draft wills, and where undue influence is a possibility the solicitor should be instructed by Mr Ng directly and see him alone.
If, after assessment, Mr Ng clearly wants the changes, I would proceed only with independent legal advice in place and with every step documented.
2. What is your response to the 4% commission and the HKD 50,000 offer?
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Both must be dealt with before any product discussion, in writing.
The commission. A 4% commission on a HKD 5 million single premium is HKD 200,000 payable to my firm. That is a material conflict of interest and it must be disclosed to Mr Ng in a form he can understand, in writing, before any recommendation, together with whether the remuneration is a one-off or trail and whether a lower-commission alternative exists. Disclosure does not cure unsuitability: an 82-year-old with a fluctuating cognitive impairment, HKD 4 million of deposits and an existing HKD 8 million policy is unlikely to need a HKD 5 million single-premium investment-linked policy at all, and the early surrender penalties would leave him illiquid. I would document the suitability analysis, and if the product is not suitable I would not recommend it regardless of what it earns.
The HKD 50,000. I would refuse it and say why. It is a personal payment from a beneficiary of the transaction I am being asked to arrange - a secret profit and an inducement to a person acting as an agent, which is both a breach of the professional standards on conflicts of interest and potentially an offence for an agent to accept without the principal's permission. I would not accept it, would not accept it "on behalf of the firm" either, and would report the offer to my compliance function the same day. The file note should record the offer, the refusal and the reason.
3. The son in Toronto demands the asset list and the policy. How do you respond, and what else should you consider?
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I would not send anything, and I would explain why in a short, courteous reply.
The information is Mr Ng's personal data. Under the Personal Data Privacy Ordinance, data may be used only for the purpose for which it was collected and disclosed only with the data subject's consent or under a legal authority. A son, however close, has no automatic right to it. I would check whether he holds an enduring power of attorney that has been registered, a court order, or written authority from Mr Ng; absent one of those, I would tell him that I cannot discuss the client's affairs, invite him to obtain his father's written consent, and offer to speak to Mr Ng about the request.
The call itself is a signal worth acting on. The combination of an absent son, a daughter controlling access, an isolated client with cognitive impairment and a HKD 21 million balance sheet is the classic profile for financial abuse of an older client. I would follow the firm's vulnerable-client procedure: record the call, raise it internally, consider whether a trusted third party or the son should be brought in with Mr Ng's agreement, and, if I believed the client was at risk of significant harm or exploitation, escalate to the appropriate authority. I would also be careful not to defame anyone in writing - the file note should record facts and decisions, not accusations.
Finally, I would not let the family dispute stop the planning. Mr Ng still needs an enduring power of attorney, a properly drawn will and a review of beneficiary nominations, and those should be done while he can still instruct.