Hannah Coffey, Financial Planning Week tip: Vulnerability considerations

As Financial Planning Week is once again upon us and we are reminded of the importance of the financial sector to help clients clarify their goals and to create a plan to achieve these goals, we should also, this year, be considering the vulnerabilities of clients – not only as a result of the Financial Conduct Authority (FCA) guidance produced earlier this year, but also, of course, as a result of the pandemic and this ‘New Normal’ we find ourselves in.

It has always been important to ensure that we understand clients as part of a holistic approach. But what they want, what’s important to them, their goals and their aspirations, may well now be quite different to how they were 12-24 months ago. In addition to this, we are made increasingly aware of the vulnerabilities, or potential vulnerabilities, clients may be facing – and how these vulnerabilities, if not identified and responded to appropriately, could lead to detrimental consequences for clients.

The statistics from the FCA’s Financial Lives survey show that more adults in the UK display at least one characteristic of vulnerability than those who don’t – at 53%. With many of these adults having multiple characteristics of vulnerability, it’s unsurprising that protecting the vulnerable is a key focus for the regulator and the industry.

If a client, new or old, appears anxious or stressed – why might this be? Have they no confidence or previous experience with financial services? Has their circumstance changed to substantially impact financial security? Are they perhaps facing something entirely different – a health concern, or deterioration in themselves or a loved one?

Familiarising ourselves with the four key drivers as identified by the FCA:

  1. Health,
  2. Life events,
  3. Resilience,
  4. Capability,

is the first step to ensuring we treat clients fairly and that we arm ourselves with the correct alternative solutions for each individual client.