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How to help vulnerable clients

  • Identify different types of vulnerability
  • Describe the FCA's requirements of adviser towards vulnerable clients
  • Describe the 'Texas' outline for handling vulnerable clients
CPD
Approx.30min
How to help vulnerable clients

Vulnerabilities can be temporary, transient or permanent.

Everyone will be vulnerable at various points in their lives

Vulnerabilities can be hard to identify, especially since individuals may not realise they are vulnerable and they may not willingly reveal their situation to you.

Dealing with vulnerable clients appropriately and fairly without giving offence can feel challenging for many advisers but academics and psychiatrists have established a number of protocols and approaches that can be helpful.

First, though, it is important to understand just what we mean by vulnerable.

The FCA definition of a vulnerable client is ‘someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’.

We all know clients who meet this definition.

At a recent seminar with members of the Society of Later Life Advisers (SOLLA) we discussed this topic.

One adviser became emotional sharing the story of an elderly client – someone who has earned fame within the profession – now being looked after by a roster of carers and whose finances are in the hands of family he considered to be unscrupulous.

It was a reminder of how close we can all get to our clients.

But vulnerability, as recognised by the FCA definition, spreads the vulnerability ‘net’ much wider than visible things like old age, dementia or physical disability.

It might also cover someone going through a relationship break-up or someone who is a full-time carer.

Vulnerability can be temporary, permanent or sporadic – research suggests that up to 50 per cent of UK adults are vulnerable at any one time.

Old age – 12m people are over 65

Cancer – 2.5m people have cancer in the UK

Bereavement – 542,000 people die in the UK each year

Alzheimer’s – 850,000 individuals suffer from Alzheimer’s

Relationship breakdown – there are 102,000 divorces each year

Parkinson’s Disease – 145,000 people suffer from Parkinson’s disease

Moving house – 1.2m homes are bought each year

Stroke – 100,000 individuals suffer a stroke each year

Loneliness – 3.6m over-65s live alone

Heart attacks – 340,000 of us will have a heart attack each year

Redundancy - 360,000 – 440,000 people are made redundant per year and there are 1.2m unemployed

Mental health – 8.9m of us are suffering at any one time from mental health issues

Being a carer - full-time (2m) and part-time (1m)

Arthritis – 11m people have arthritis

Being a lone parent (1.8m)

Sight impairment – 2m people live with sight loss; 360,000 are registered blind

This presents a number of challenges for advisers and investment managers who often see clients only once or twice a year.

Many of the causes of potential vulnerability will not be visible or revealed unprompted to an adviser, but they may leave the affected individuals distracted and unable to give complex decisions their full attention.

And even if your company has a ‘flag’ to identify a client as vulnerable, you cannot trust that the flag is up to date. 

This is a complex area, with many opportunities to miss a vulnerability or cause offence by handling things insensitively.

Those of us working in adviser businesses are best equipped to meet this challenge, but none of us can rest on our laurels.

Training and development

Ongoing training and development is essential. The regulator has high expectations.

The latest ‘Guidance for firms on the treatment of vulnerable customers’ published in July 2019 by the FCA makes it clear that they expect every employee of every regulated company to take seriously the fair treatment of all clients.

Fundamentally, the FCA wants the financial outcomes of vulnerable clients to be at least as good as those for other clients.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Which of the following is NOT considered to be someone who is vulnerable?

  2. Which of the following is NOT something that the FCA expects advisers to do towards clients?

  3. Which of the following is NOT something to look out for with clients who are potentially vulnerable?

  4. It is best to speak louder with people with hearing issues, true or false?

  5. Which of the following is incorrect in the Texas framework?

  6. You can record the client's meeting without their consent, true or false?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Identify different types of vulnerability
  • Describe the FCA's requirements of adviser towards vulnerable clients
  • Describe the 'Texas' outline for handling vulnerable clients

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