How to accommodate clients’ changing vulnerability

This article is part of
Guide to the consumer duty

"Then there is also the issue of concentration and engagement. Research varies on the length of time an adult can concentrate for, ranging from eight seconds to 15 minutes; but either way, it is not a vast period of time."

He adds: “As such, another key consideration in relation to communication is the amount the adviser is trying to communicate and over what time span. Again, this will vary from customer to customer.”

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Evolving needs

A survey of 100 advisers found that half had formally sought to identify which clients may be vulnerable in the previous six months, and three in five recognised half of conditions relating to vulnerability.

While an initial fact-find may not reveal elements of vulnerability, such characteristics may emerge subsequently. Research by the FCA during the pandemic, for example, found that more consumers found themselves in vulnerable circumstances due to Covid-19.

Likewise, a customer that showed signs of being vulnerable 12 months ago might not display the same signs today, says Chris Smeaton, head of propositions at Seccl.

“This means firms need to develop methods of monitoring and measuring customers and their needs on an ongoing basis, to ensure its adjustments remain valid and appropriate for a range of customers in different situations,” Smeaton adds.

Indeed, long-lasting implications of the pandemic and the current cost of living crisis mean advisers need to focus on changes to a client’s income and expenditure during reviews, says Greenwood at SimplyBiz.

“Big shifts in this area alone might be enough to indicate the presence of vulnerable characteristics,” he adds.

Regardless of the client, within all forms of communication the information needs to be concise, in simple English, jargon-free, and consider clients’ financial knowledge, competencies and mathematical abilities, says Williams at Dynamic Planner.

“In some circumstances it will not be possible to have access to technology to communicate effectively, and therefore advisers will also need to ensure that they have empathy and high levels of emotional intelligence to communicate appropriately with different types of customers.”

Chloe Cheung is a senior features writer at FTAdviser