The importance of recognising and understanding vulnerability

At BFP, caring for vulnerable clients is embedded in our culture. We are continuously on alert for the signs and planning how to service these those whose needs may be different.

Recently, our entire team successfully completed the professional assessment on ‘Vulnerable Customers’ provided by the Chartered Institute of Securities and Investments (CISI). This is something we are very proud of and believe few (if any) financial planning firms in the country can boast of!

We are also members of The Financial Vulnerability Taskforce, an independent representative body covering the Personal Finance Sector, whose ultimate purpose is to promote greater understanding, encourage appropriate behaviours and establish good practice in respect of consumer vulnerability.

Defining and identifying ‘Vulnerability’

The FCA’s definition of a vulnerable client is ‘someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’. Many may associate the word vulnerable just with the elderly, when according to research, approximately 50% of UK adults are considered vulnerable at any one time.

Vulnerability could arise because of:

• Health: mental or physical conditions that affect the ability to carry out day to day tasks

• Resilience: a low ability to withstand or cope with financial and emotional shocks

• Capability: low knowledge or confidence in financial matters

• Major Life Events: such as; being made redundant, a relationship breakdown, new caring responsibilities  and even sudden wealth.

Vulnerability can be temporary, permanent or sporadic and no one is immune from being affected. Additionally, not everyone going through a situation mentioned above is automatically considered vulnerable. There is also the chance that if you are vulnerable, you might not realise it at the time.

Dealing with all things financial can be daunting even for the savviest of us. The rules, regulations and all the financial jargon that comes with finances can be hard to comprehend but, if you are considered a vulnerable person, it can make understanding things so much more difficult. The concern with vulnerability is that if someone is struggling to represent their own interests, decisions made during this phase could potentially be detrimental and irreversible.

What we do to help:

We endeavour to make sure that, in all cases, a client has the capacity to understand the advice they are being given.  If they don’t, and there is no one with a Power of Attorney in place enabling a trusted person to act on their behalf, the advice process will be put on hold.  If we identify an existing client who is becoming vulnerable, we will discuss as a team and agree a strategy.

With all clients, our approach involves avoiding jargon, listening carefully and holding meetings in accessible locations. We endeavour to go above and beyond to support those clients requiring additional care and help, beyond the usual financial planning process. We understand that some people may not wish to turn to friends or family for help and so here are a few examples of the things we regularly help our clients with:

Technology: Technology can sometimes move faster than we do. This can create a barrier for clients in carrying out simple tasks such as completing a bank transfer, opening an account or trying to contact a provider. We’re here to help however we can, whether it’s using our own contacts to look up the number they need or talking them through the task itself.

Post, paperwork, emails etc: If clients receive a letter or communication that they’re not sure about, we encourage them to forward it to us so that we can provide guidance or even step in and action anything required if necessary.

Scams: We are always on alert when it comes to the latest scams that are circulating and regularly notify our clients of this via email and social media. Equally, clients can pick up the phone to ask us about any worrying communication they’ve received.

Transparency: We always aim to set out any correspondence in a clear manner and avoid financial jargon where possible, whether it is setting out costs, summarising the main points of any correspondence in a summary letter or offering larger print if necessary. We encourage our clients to ask questions and we will always offer a follow up phone call or visit to make sure they are content with what they have received. A recent client survey of ours revealed that 100% of our clients felt that we made every effort to tailor their financial plan to their needs.

Here at BFP, we continually aim to improve our own knowledge and skill set on this subject as we are passionate about providing the best possible outcomes for our clients. We’re here to support you and be your trusted independent sounding board for whatever the future may bring.