Fair treatment of vulnerable clients is a regulatory priority within the financial services profession. As a Financial Planner, it’s an essential part of our business practices too.
A new report looking at adviser and consumer attitudes to vulnerability has confirmed that the majority of people want some support.
Equity release provider more2life asked homeowners aged 55 and over how they would react if their financial adviser offered them support because they thought they were vulnerable.
Three-quarters of those asked said they would feel comfortable with the offer of support. Although the majority of older homeowners said they would welcome additional support if their adviser was concerned about their vulnerability, 19% said they do not need any help.
21% of those surveyed said they would only welcome assistance if it did not slow down the process of doing business together.
What’s more, more than a quarter said they would question why their adviser thought they, or a family member, are vulnerable, while 8% would be ‘upset’ at being regarded as vulnerable when they are not.
It’s a tricky balance to strike as an adviser. We clearly don’t want to upset our clients, but at the same time, we have a duty of care to ensure that decisions are being made in the best possible way.
We all experience vulnerability at different times in life; being ‘vulnerable’ is not merely a factor of getting older, although age can introduce more potential for client vulnerability.
The research found that the likelihood of vulnerability is thought to increase as people age, with 40% of homeowners agreeing that, as people get older, they are more likely to be vulnerable.
Feeling vulnerable was also more common among women over 55 (32%) than men (28%).
Our regulator, the Financial Conduct Authority (FCA), is consulting on the introduction of a formal duty of care for those advisers helping their customers.
This new rule would introduce a legal obligation for advisers to act in the best interest of their clients, as well as exercising reasonable care and skill when providing a product or service.
The research suggests that the majority of advisers support this approach, although many believe that this should already be part of a firms approach.
Dave Harris, CEO, more2life, said:
“Vulnerability is a tricky topic for advisers and lenders as while we are committed to supporting people who need additional help, clients may very well not identify themselves as being vulnerable. So the challenge becomes helping them make the right financial choices for both the short and the long term while at the same time encouraging them to realise they may be vulnerable and that this is entirely okay.
“Today’s research suggests that three-quarters of older homeowners would welcome support if they were vulnerable which should act as a reassurance to advisers as they have these conversations with their clients. That said, there is still a disconnect between believing that vulnerable people need more support and being vulnerable themselves so advisers are keen for more resources and tools to help with these tricky conversations.”