Ken DavyApr 6 2021

Advisers are uniquely able to help vulnerable clients

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I have written, and spoken, at length about some of the positives we can take away from this period, which include innovation in tech and the introduction of efficiencies to our businesses.

I believe many of us also have a new understanding of the relationships in our lives, and will have a renewed appreciation for the support available from our friends and family. 

Indeed, a growth in community-based social projects, the Thursday night clap for the NHS, and the online #bekind initiative also demonstrated the importance that a warm and respectful word or gesture from a stranger can hold. 

Mental and physical health concerns are at an all-time high

However, the flip side of this is that those either without or isolated from a supportive network who are experiencing a great deal of strain or pressure; suffering from either mental or physical ill health; grieving for or caring for a relative; or in any number of other, stressful situations, may have been deeply, adversely affected by the events of the past year, rendering them vulnerable. 

Of course, treating clients who are either inherently vulnerable, or who may be experiencing circumstances that have made them temporarily vulnerable, in a way that is sensitive and fair was already part of the process for advisers and brokers. 

However, over the past few years, guidance and research from the Financial Conduct Authority has led us to think about vulnerability much more broadly: what it means to individuals, how to identify vulnerable clients, ways in which to approach sensitive conversations, finding appropriate solutions, and documenting all meetings and any actions taken. 

The FCA’s focus on this area – most recently in its publication of ‘FG21/1: Guidance for firms on the fair treatment of vulnerable customers’ towards the end of February – means that ways of working now need to be formalised into documented processes, procedures and cultures.

Just in advance of that finalised guidance, the results of the FCA’s Financial Lives survey showed that more than a quarter of UK adults are now vulnerable. 

Mental and physical health concerns are at an all-time high. With the recession, furloughing, redundancies and entire industries going into shutdown for months at a time, many others found that their financial resilience was not secure enough to protect them through this period.

What this means for you and your clients is that people who entered 2020 with robust physical, mental and financial health, may now find themselves in a completely different situation. 

And, of course, a cursory or superficial conversation may not be enough for us to discover how significant a change has occurred to a client’s circumstances.

While the majority of advisers and brokers are highly adept at getting to know their clients and identifying areas of concern, I believe that, like the role of the adviser generally, this process has never been more important than it is now. 

New ways of approaching conversations with clients to understand their situation and state of mind may be needed, and ways in which to document your findings and the action you are going to take will almost certainly be necessary to meet the requirements of the regulator. 

Concerns about one’s financial wellbeing can be hugely damaging to a person’s mental health and vice versa, this is where the services of a professional financial adviser are absolutely invaluable. 

We have long helped consumers who are in good health and secure employment understand the importance of protection. The damage wreaked by Covid-19, if nothing else, has clearly demonstrated the ways in which someone’s control over their finances can be destroyed overnight by unforeseen forces.

Helping your clients to create a robust financial plan, with protection at its heart, will certainly help some to feel less vulnerable, whatever the future may bring. 

Our sector is consistently agile and quick to react to changing circumstances, and we have seen some real innovation over the past year in relation to supporting vulnerable clients and some fantastic education and training resources from providers and lenders. 

SimplyBiz launched its own Vulnerability Hub back in June 2020, and a programme of events, guides and updates, which has been warmly welcomed by the companies who use our services, with thousands of visits to the online resource over the past six months. 

I think it would be difficult to find anyone who has not felt vulnerable in one way or another during the past year and, while I hope it has been a temporary state for most of us, I believe we all know someone who is facing a longer-term struggle. 

I am sure that we are all making an effort to check-in with our friends and family and, hopefully, are also receiving the same support in return. 

When it comes to clients, advisers and brokers are uniquely positioned to demonstrate the value in our services, which could be more important to vulnerable consumers than ever before. 

Ken Davy is chairman of SimplyBiz