Why a dose of reality is needed for pensions planning

• To justify their fees advisers will need to help clients grasp the full implications of all their retirement income options.
• Proper attention to vulnerable clients is likely to be high on the FCA’s list of priorities. 
• Advisers' potential conflicts of interest, in particular via DB transfers, is expected to play a key role in the regulator’s thinking

Since then, the regulator has been producing regular updates to ensure financial services firms are treating vulnerable customers appropriately and fairly. 

According to the regulator, advisers must now offer clients a choice of ways of communicating.

The watchdog said that communication should be designed in an inclusive way so that it is clear, easy to understand and meets client needs.

This could relate to the method of communication (for example, audio/braille/face-to-face) or the service delivery (such as agreement to talk at a particular time of day depending on carers and medication).

Keith Richards, chief executive of the Personal Finance Society, said he agrees with Mr Dingwall about the preconceptions advisers have about what is 'vulnerable' and the need for them to think again about their approach to these clients.

He added: "People think vulnerable means anyone over the age of 80 and therefore [advice] should be focused on how much exposure these clients should be given to equities, for example, but it is so much more than this.

"Everyone technically is a vulnerable customer. You have to take into account the individual needs of the client. Moreover, people at the same age may have completely different needs, so you cannot age categorise."

It is important that advice does not just happen at the outset, but that there is a continuation of a relationship throughout the client cycle.James Dingwall

People in later years may have issues such as a breakdown in cognitive functions, which should be taken into account if the adviser is providing an ongoing service late in to retirement, but Mr Richards added it is important for advisers to be able to demonstrate how to deal with any vulnerable client, in any situation. 

The regulator stated advice firms could begin by auditing current practice in handling vulnerable clients.

Ongoing evaluation of the effectiveness of a vulnerability strategy is also required, the watchdog stated.

According to Mr Dingwall, if advice firms want to ensure they are treating vulnerable clients appropriately they should first identify if there are any vulnerable clients, or where vulnerability could be an issue, and set out a framework for dealing with it.

He also said: "Importantly, firms should invest in staff at all levels so they can identify anyone who could potentially be vulnerable."