Working with clients who may be vulnerable, or show signs of vulnerability, is not uncommon – especially when offering services to those of an advanced age or with complex personal circumstances.
There are important signs to look out for with vulnerability and ways to best approach the issue to ensure best outcomes for clients.
There are important financial regulatory considerations to be made around vulnerable clients, too. City watchdog the Financial Conduct Authority has a specific definition of what constitutes a vulnerable customer:
“A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.”
The FCA refers to vulnerability among clients as creating a “spectrum of risk” which professional services providers need to be keenly aware of and able to deal with.
Complexity of vulnerability
Vulnerability is a complex problem. When a client should be classed as ‘vulnerable’ isn’t easy to define. The FCA says around 25 million people in the UK exhibit at least one or more signs of vulnerability.
The regulator’s 2022 Financial Lives research defines vulnerability as including low financial resilience, poor health, negative life events and low capability as all pertaining to increased vulnerability.
Health issues are also a clear indicator, but diagnoses such as cancer or dementia have varying effects on an individual’s wellbeing. The prognosis of these illnesses can also lead to some important financial decisions that need to be made.
Such illnesses often initiate a process such as a lasting power of attorney (LPA), a will update, or other legal work change that will have important financial considerations and implications.
Losing a partner is another trigger for vulnerability and the need for clients to seek out professional legal services, particularly if they’re dealing with the estate or other implications from the loss of a loved one.
In these circumstances it is essential to use the expertise of a financial adviser to better discern choices and planning for the vulnerable client in question.
This is important both for the regulatory implications of how you treat that client, but also to ensure the overall health, wellbeing, goals and outcomes for the client are met in the best way possible.
How to look after a vulnerable client
This is a very tricky issue as looking after the needs of a vulnerable client can require patience, empathy and diligence on the part of the service provider.
Within your business, it’s critical you ensure team members who deal with clients and the general public more widely are trained and well-versed in spotting the signs of vulnerability. The FCA has clear guidance on this.
The first step is to ensure your team understands the issue of vulnerability, its scope and how it affects people in their day-to-day lives.
Second, staff should be skilled and trained to offer practical and emotional support to customers who could be vulnerable. Especially important is giving frontline staff the tools and training they need to manage such a client.
Third, practical steps to ensure the wellbeing of the client is protected is key. Products, customer service and communication all need to be empathetic and easy for clients to understand.
When a vulnerable client, their relative, guardian or other trusted third party approaches your business to take care of a specific matter, understanding what their wider needs may be and if broader financial advice should be considered is really important.
Instead of providing singular services this will help them to meet their broader needs and ensure the best outcomes possible in the circumstances.