In Focus: Vulnerability  

Keith Richards: What makes people vulnerable?


When it comes to the 2021 lockdown, "advisers are taking it in their stride", according to Keith Richards, chief executive of the Personal Finance Society. 

"Clearly the need for financial advice is greater than ever", which puts advice firms at an advantage, he told FTAdviser In Focus' first Fireside Chat of 2020. 

He added: "While we cannot underestimate the impact this is having on some firms and their staff, and indeed the wider public, many advice firms are doing really well and capitalising on the fact that people really do need professional support during these challenging and unprecedented times."

Mr Richards said the "degree of uncertainty" had been the biggest concern for individuals - the opposite of "planning", which aims to provide a level of certainty but agreed there have been instances of heightened vulnerability because of Covid-19, inside and outside of financial services. 

He said: "We are supporting our members and the advice community. Advisers are themselves equally vulnerable to the stresses that most people have been subject to", and urged advisers to focus on their own wellness and well-being.

The rising costs of regulation and the hardening professional indemnity market are also making firms increasingly financially vulnerable, he said, stressing the PFS's "hard work" behind the scenes to improve financial regulation in the UK.

The PFS has put its weight behind a new cross-industry vulnerability taskforce, creating a Financial Vulnerability Charter for advisers to adopt, so they can express their commitment to vulnerable clients.

Advice firms wishing to adopt the charter must commit to nine core pledges, and will be expected to display their commitment on their website.

"Certainly for professionals, any client who comes to you is potentially vulnerable. We need to be more aware and alert to different vulnerabilities and this is going to be a key part of financial planning in the future."

He spoke of redundancy in particular as an emotional and vulnerable position, citing the issues around British Steel, for example, as a catalyst for people making knee-jerk financial decisions. 

Mr Richards said: "It's a very emotional time, when you've been told that you are in a pension scheme that gives you a guaranteed income for life, and the next minute you are thrust into the potential risk redundancy and you are told that the pension scheme is at risk of being pushed into the lifeboat fund."

This means people are far more likely to make spur-of-the-moment decisions, regardless of any professional advice, as well as being heavily influenced by their peers and the opinions of people around them. 

He said: "These things can make people vulnerable to the moment rather than their long-term financial well-being."