"It is vital for advisers to be able to confidently identify vulnerable customers and understand the challenges they face."
Advisers say recognising vulnerable clients is one of their biggest priorities, but just one in ten believe it is easy to identify them, according to new research from more2life.
84% of equity release advisers believe recognising vulnerable clients is one of their biggest priorities and 94% say it is very important to have an understanding of issues surrounding vulnerability. However, just 12% of advisers believe it is generally easy to identify these clients.
When asked how they would best describe the vulnerable clients they had advised over the past 12 months, over half of advisers (52%) said their clients were of advanced age. More than four in ten (42%) said that their clients had significant financial worries, while 37% said that their clients had experienced life-changing events which had contributed to their vulnerability. Just 8% of advisers said their vulnerable clients had been diagnosed with a mental health illness, and only 9% said that they had caring responsibilities.
This seems to suggest that while advisers are able to spot the most obvious signs of potential vulnerability such as age, they need more support to recognise the more subtle signs of vulnerability. The complex nature of this challenge is something that advisers seem to be aware of, as the proportion who feel it is easy to spot a vulnerable client gradually falls from 17% in 2018 to 12% in 2020.
The research also shows that advisers are using various techniques to help identify signs of vulnerability among their clients. Nearly two-thirds (64%) of advisers test their clients’ decision-making by asking them questions around the products discussed during meetings, while 63% ensure clients are answering questions directly without coaching from family or friends.
A similar number (62%) ask a lot more questions around a client’s personal circumstances if they suspect them to be vulnerable. Yet, less than a third of advisers would speak to another member of their team to ‘sense-check’ their conclusion.
Dave Harris, CEO of more2life commented: “Figures from the FCA show that 1.5 million more adults are showing characteristics of vulnerability since the start of the Covid-19 pandemic and there is much to suggest that the older generation will be particularly hard hit. Whether they are worried about redundancy or the need to take early retirement and its impact on their finances or are concerned about how they can support their families, now is a time of great uncertainty for many.
“While much still needs to be done, the fact that the significant majority of advisers understand the importance of recognising vulnerability is a positive step but it’s clear that they need more support in this area so they can better serve their clients. It is vital for advisers to be able to confidently identify vulnerable customers and understand the challenges they face.
“Educational resources and practical guidance for advisers on techniques they can use as part of the advice process is crucial - especially when face to face meetings are not possible - to ensure they feel confident to spot and support vulnerable clients. Now more than ever, advisers need greater clarity and support, which is why more2life strongly welcomes the worth that the FCA’s is doing on vulnerability as they work to ensure the best outcomes are achieved for older customers.”