It is more important than ever for advisers to have robust and systematic processes in place for identifying and supporting their vulnerable clients. That said, we understand that this process is much easier said than done.
After all, clients rarely consider themselves as vulnerable, and those who do often want to remain under the radar. In fact, many will end up using surprisingly effective coping mechanisms to hide or mask their vulnerabilities. This, of course, makes everything extra complex for the adviser.
Then there is the act of identification itself. More often than not, this tends to be a reactive process; highly subjective and inconsistently deployed, with endless opportunity for bias to affect our judgement.
Even for trained clinical experts, identifying someone at risk of a more cognitive vulnerability can be far from easy.
While the process can be multifaceted, we do tend to spot some more common (and arguably easily fixable) mistakes that advisers can make when they are working with their vulnerable clients.
Read below to see if you recognise any of these common mistakes advisers make when it comes to vulnerability.
1. Not assessing each and every client
In order for the vulnerability identification and assessment process to work, it has to be done consistently across each and every client. This means that every client has to be assessed in exactly the same way, no matter whether the adviser thinks they are likely (or unlikely) to be vulnerable.
It is, of course, never acceptable to assume that if a client is wealthy that they are not at risk. Vulnerability is complex, and anyone can be susceptible.
Advisers must avoid all assumptions and preconceptions and assess every client for the same signs of vulnerability each time.
2. Failing to spot the triggers
The Financial Conduct Authority has identified four key drivers – or triggers – that may result in a client experiencing vulnerable circumstances. These are health events, life events, capability, and resilience.
There is a tendency to see these as fixed, but the reality is that no two people will have exactly the same combination of vulnerabilities. In any case, determining whether one, or indeed more, of these triggers are present should be an adviser’s first port of call when assessing a client for signs of vulnerability.
Often we see that advisers might spot a vulnerability and then only focus on that initial vulnerability when in all likelihood there is more than one vulnerability at play. On average we see that vulnerable clients will have 2.4 vulnerabilities, with this number increasing with age.
Advisers will need to be mindful to assess for a full array of vulnerabilities and then act accordingly for that client.
3. Missing the causative nexus
Once a potential trigger has been identified, understanding the concept of the causative nexus is fundamental for advisers to be able to determine how best to support that client.
Ultimately, this hinges on the idea that it is not a circumstance or trigger that makes someone vulnerable. Instead, it is their unique emotional, physical, or psychological response.
