Protection for vulnerable clients is a subject that can be looked at as being complex, sensitive, risky, unfair and undoubtedly an area of ongoing struggle, both for advisers and clients.
However, Andrew Wilkinson, director of specialist advice business Moneysworth, provides hope.
He says: “One of the most successful attempts in recent years to better match risk and protection for vulnerable customers has been the development of an alternative mental health philosophy to solve the thorny problem of how to deal with applicants for life insurance who have significant mental health disclosures, especially in recent years.”
Wilkinson explains that due to the increased risk of a claim for self-inflicted death after the initial automatic 12 months exclusion, insurers found generally that there were customers who they felt unable to offer cover. This led to several bad news stories in the national press about uncaring insurers. But most importantly this was a disaster for the clients, who found themselves locked out of being able to access cover to protect their families and mortgages.
“Lots of them felt stigmatised, forced through questioning to revisit very difficult periods of their lives only to find themselves rejected, [with] feelings of failure at being unable to protect their families and a kick in the face to their recovery.”
Indeed, finding solutions for fairer and more compassionate treatment of vulnerable clients has become a key aspect in developing trust in the advice sector and financial services as a whole. But how should advisers approach vulnerability and encourage honest disclosure?
Johnny Timpson, financial inclusion champion and part of the steering committee for the Group for Autism, Insurance and Neurodiversity (Gain), has lived experience of autism and says that vulnerability is everyone’s business.
“Identifying and supporting clients, colleagues, friends and family in moments of vulnerability is a challenge that transcends financial services."
However, Timpson advises it is important not to assume that your client’s disability makes them vulnerable. “This is because disability neither defines people nor makes them vulnerable. It’s the circumstances, such as your office or your website not being accessible to them, that is the factor that does this”.
Alan Lakey, director of CIExpert and Highclere Financial Services, says: “Advisers need to be aware that vulnerability is not always apparent to the eye and it is only after asking relevant questions that the matter can be settled.
“While it may not be standard for protection advisers, it could be wise to incorporate additional questions into the discussion to unearth the applicable information.”
Timpson recognises such additional questions can be very sensitive and need to be handled carefully.
“Most of us are highly sensitive when comes to our personal and family health and circumstances,” he says. “While there are tools being developed that can assist identify potential vulnerability, creating a trusted, secure and empathetic environment that enables you to ask open questions of your client is essential to identifying the vulnerability that your client is actually presenting or could do so if circumstances change.”