Dealing with Vulnerable Clients
Vulnerability, particularly in relation to mental health issues, is something that has consistently made headlines over the last couple of years.
So it is no surprise that it is also on the FCA’s radar. Indeed, in February 2015 it issued its Occasional Paper No. 8: Consumer Vulnerability, which covers topics such as ‘what is vulnerability?’ In September 2017, Occasional Paper No. 31 followed, which focuses on the UK’s aging population and financial services.
So, what is vulnerability and whom does it affect?
A vulnerable client could be considered anyone who, by virtue of their health, age or circumstances, may be unable to assess or understand information explained to them either during meetings or information (subsequently) sent to them in writing. It may also be an individual who could easily be influenced and/or someone that accepts advice without giving due consideration to its suitability.
Vulnerable clients come from all walks of life. They include the young, the elderly, individuals in poor health, those with learning difficulties, people going through divorce or bereavement, and people who suffer from depression – there are many guises and not all of them are immediately apparent.
Many people in vulnerable situations would not diagnose themselves as being vulnerable.
It is also well documented that the UK has an ageing population; currently there are more 65 year olds than 16 year olds. In addition, over 3.8 million households in the UK do not have Internet access. So if your company predominantly operates online or sends correspondence via email, what procedure do you have in place should your client be in one of these households?
Another question: how many older clients do you have who tell you that they are good with technology and are able to access their emails? But have you ever checked whether they are actually capable of opening and reading attachments?
The number of different scenarios that could be classed as dealing with a vulnerable person is endless.
But, have you ever stopped to think that you or your company could also be vulnerable?
If, as an individual IFA or as part of the company you work for, you do not have a process in place for dealing with vulnerable clients, you could potentially be putting yourselves in this very position.
It is imperative that you have a vulnerability process in place and that all your staff are aware of it and know what steps to take in certain situations. If you don’t, the good news is that there is help at hand! The FCA’s Occasional Paper No. 8 includes an Appendix (number 4) which contains practical tips to assist firms in addressing the needs of vulnerable consumers. And the Royal College of Psychiatrists and the Money Advice Trust have worked together to develop numerous protocols which can assist staff in dealing with conversations around client vulnerability. Indeed, the Money Advice Trust can even provide you with training – just give them a call.
However, as IFAs, the most common group of vulnerable clients you will probably come into contact with is the elderly. This is why, at Blackfinch, we have established a range of offerings to help mitigate Inheritance Tax (IHT) that may suit this group. The range includes the Adapt AIM Portfolios (which are also ISA eligible), the Adapt IHT Portfolios (with capital preservation and growth options) or, for those seeking added cover, the Adapt IHT Protected Protected Portfolios, featuring a two-year life cover policy (see the brochure for criteria).
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