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Vulnerable clients more likely to open up with proactive adviser

Vulnerable clients more likely to open up with proactive adviser

Clients experiencing vulnerability are most likely to communicate issues to a proactive adviser, research has shown.

Research from Just Group found the majority (84 per cent) of advised clients over the age of 45 did not tell their financial adviser about a life event that could result in vulnerability.

The survey, conducted by Opinium, surveyed 2,206 UK adults over the age of 45 who either currently or previously had a financial adviser.

The survey took place between October 29 and November 2.

When asked for the reason why they did not inform their adviser about the vulnerability they were experiencing, the top three answers given were the client thought it was not relevant to their adviser, it was considered a private matter or the client did not think it was relevant to their future plans.

Just Group added that the clients who did disclose their circumstances to advisers were met with a “mixed response”.

Just stated: “Positive comments included people saying the adviser was more understanding about the client’s emotional situation after marriage break-up, were more compassionate and more sympathetic to those impacted by illness in the family. 

“However, in about a third of cases they said disclosure made no difference.”

Why didn’t you tell your financial adviser?

All

Male

Female

It wasn’t relevant to my adviser

32%

31%

32%

I considered it to be a private matter

28%

30%

27%

It wasn’t relevant to my future plans

26%

26%

27%

It was none of their business

15%

20%

11%

They didn’t ask/raise the issue

8%

8%

8%

I was too embarrassed

6%

4%

7%

I would not trust my adviser with such personal information 

4%

6%

3%

Other

16%

15%

16%

Source: Just Group, respondents who had experienced vulnerability

Stephen Lowe, group communications director at Just Group said that some important conclusions could be drawn from the research about how a firm could go forward with their vulnerable customer strategy in future. 

“Clients seem much more likely to talk about their circumstances if the adviser has previously highlighted it as important and expected,” he said. “That means touchpoints such as reviews and communications should be used to educate and reinforce the message about vulnerability."

Do you think if your adviser undertook any of the following it would help you engage more closely with the issue of vulnerability and how it might affect you?

Yes

No

Provide clients with a checklist of all the potential characteristics of vulnerability

61%

39%

Educate clients on the range of characteristics of vulnerabilities

57%

43%

Emphasise the importance of clients disclosing characteristics of vulnerability

56%

44%

Ask clients more questions around characteristics of vulnerability

55%

45%

Develop closer personal ties with their clients

51%

49%

Source: Just Group, respondents who said they had experienced vulnerability and did not mention it to their financial adviser

He added: “While the majority may react positively to this kind of active engagement that still leaves a sizeable rump of clients who still may resist. There is an opportunity for the industry to keep working together and sharing best practice to ensure we can meet our regulatory responsibilities.” 

Lowe added that it was important that clients who do divulge vulnerable circumstances are made to feel they made the right choice in terms of extra care and attention they receive.

The Financial Conduct Authority's Financial Lives 2020 survey found 53 per cent of UK adults had one of more characteristics of vulnerability.

In the FCA's guidance in this area, which was published in February 2021, the regulator warned that its focus on the way firms treat vulnerable clients will not be a "one-off exercise".

In the paper, it said firms could expect to be asked to demonstrate how their business model, actions and culture ensured the fair treatment of all customers on a regular basis.

The guidance could also be relevant in any enforcement cases against firms under its watch.

sally.hickey@ft.com