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How to deal with vulnerable clients post-pandemic

  • Explain some of the challenges posed by vulnerable clients
  • Identify ways of assessing vulnerability
  • Identify factors that affect vulnerability
CPD
Approx.30min
How to deal with vulnerable clients post-pandemic
 Anete Lusina

As we ease out of lockdown, it is interesting to reflect on how the impact of the last 15 months may have changed the way advisers communicate with clients for the long term.   

The move to video and telephone-based meetings, with limited face-to-face meetings, has shown that there are different ways to communicate effectively, including with vulnerable clients. 

But what is going to happen when there are very few restrictions or no restrictions on meeting clients? Will advisers go back to only having face-to-face meetings?

Or will there be a blended approach of face-to-face, telephone and video meetings to give clients greater choice and flexibility on how they want to communicate and manage their affairs? 

Dealing with vulnerable clients

In February this year, the Financial Conduct Authority (FCA) issued FG21/1 Guidance for firms on the fair treatment of vulnerable customers and there’s no doubt vulnerability will continue to be a key focus area for them. 

The guidance defines a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”.

Closer analysis of the guidance pulls out some key points that financial advisers should be aware of. 

For example, as a financial adviser you should familiarise yourself with the many situations and circumstances that may lead to a client, or potential client, being or becoming vulnerable. It is also noted that all clients are at risk of becoming vulnerable. The FCA considers this risk to be increased by characteristics of vulnerability related to four key drivers:

  • health, that is health conditions or illnesses that affect the ability to carry out day-to-day tasks
  • life events – major life events such as bereavement or relationship breakdowns
  • resilience, or rather a lack of it if a client struggles to withstand financial or emotional shocks 
  • capability, that is the level of a client’s knowledge of financial matters or low confidence in managing money.   

The FCA’s Financial Lives 2020 survey provides data on many of these characteristics including how they overlap. It showed that by October 2020, 53 per cent (27.76m people) had characteristics of vulnerability. 

There is also an increasing amount of anecdotal evidence that many advisers feel they need to develop and improve their skills in both identifying and dealing with vulnerable clients. This makes sense, because every existing or future client – in fact, every single one of us – has the potential to be vulnerable at some point in our lives. 

Nevertheless, quite understandably, some advisers find discussing those issues very difficult.

How to start identifying potential vulnerability

No matter how you are planning to engage with your clients post lockdown, you will need to have deeper and more meaningful conversations as we emerge from the pandemic. It is not enough to just ask standard questions or complete a tick-box form. To comply with FCA guidance you should endeavour to truly understand clients’ concerns and issues. 

That may mean that you need to allow for more time in appointments, so that you can have room for longer and more detailed conversations with clients. 

And on your first face-to-face meetings, or at your next remote meetings, be prepared to ask those more difficult and searching questions. Your clients will be only too happy to share their experiences with you – both the good ones and the challenges that they have faced – but only if you ask.