The FCA, the Financial Vulnerability Commission, and others have been shining a brighter light on vulnerable customers in recent years, and it’s no surprise.
The question is how to care for and advise vulnerable customers who may lack the ability to make informed and balanced financial decisions.
In fact, the population is aging, and aging increases the risk of vulnerability. The issue is also how to deal with the potentially growing number of vulnerable customers, which could eventually reach thousands or even hundreds of thousands.
A story from a few years ago remains in my mind. I was chatting with a financial planner and we talked about how financial planners deal with client vulnerabilities.
In the days before video calling, she said she had older female clients who were increasingly reluctant to visit her office, even though it was only a few hundred meters away. rice field. When I asked her why, she replied that she didn’t want her beloved and elderly dog alone in her house.
On our next visit, the planner arranged for the lady to be picked up from her home and taken to the office with her dog. Young staff members then took the client out for a walk in the local village, and the planner took the time to carefully consider everything while going over the woman’s financial situation together. The result: happy customers (who would have missed important advice without the meeting) and happy dogs.
Years later, another planner told me that clients are often the first to notice signs of memory fading as they get older. They noticed that some clients forgot important information, looked a little scrambled, or became repetitive. In such cases, they gently advised clients and family members to seek medical assistance. The planners, who had worked with them for many years, were often the first to spot the early signs of dementia because they noticed small but significant changes.
In many ways, planners are right at the forefront of all this. Often they work with clients in her 70s, 80s or older. I know several paraplanners who have over 100 clients of hers. Age does not necessarily mean vulnerability, but it is often associated with age.
Many scammers and victims of scammers trust people well over 70. Family abuse of the elderly has also become all too common.
A very small percentage of vulnerable clients is often assumed to be quite wrong. An anecdote I’ve heard is that there are very few financial planners who don’t have a client list that includes clients they are concerned about. Some may already be quite or very vulnerable.
With this in mind, a study released this week by consultancy AKG suggests that raising awareness of these issues is starting to pay off.
An AKG study found that financial advisors are steadily changing their attitudes and responses to vulnerable clients, especially when it comes to mental health issues. Nearly two he in five of her advisors (39%) say they now consider their clients’ mental health when providing advice.
On the downside, it’s clear that only 17% of advisors believe the financial services sector provides adequate support for vulnerable customers, so much remains to be done.
Nearly half (47%) of advisors say they welcome more support from their providers in preparing for the upcoming consumer tax and its weaker customer requirements. Nearly 55% of advisors value assistance in identifying and supporting vulnerable customers, and 50% would like training to help identify and service vulnerable customers.
There is a real opportunity here for planners and providers to make significant strides in how they help vulnerable clients.
Recent anecdotal evidence makes it clear that great efforts are being made, but the industry in general could do more. When consumer obligations are imposed, the FCA will question how advisors are dealing with vulnerable clients. Advisors need to be able to demonstrate what they do and how they make a difference.
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Kevin O’Donnell is the editor of Financial Planning Today, where he has worked as a journalist and editor for over 30 years.