If we consider an instance of bereavement, someone who loses a life partner or close family member is likely to suffer a significant emotional impact, affecting their mood and consequently their ability to engage and concentrate. By comparison, if someone loses a distant family member, who they perhaps weren’t particularly close to, the emotional impact may be less severe.
Put simply, the causative nexus is the reason one person is affected by a certain situation, while another is not.
A good rule of thumb is that the greater the causative nexus, the greater the extent of the vulnerability. If an adviser understands the impact of the circumstance on the individual, they can then use this information to identify how best they should offer support.
On top of this we also see a common occurrence of advisers focusing only on the vulnerable circumstance, not the impact it is having on the client themselves. Understanding this nuance is important to provide the best possible outcome for the client.
4. Thinking one size fits all
It is important to remember that there is no-one-size-fits-all solution when it comes to vulnerability and likewise an adviser's response will need to vary depending on the specific individual.
It is important that advisers can determine the support an individual vulnerable client might need. Advisers will need to consider whether the client needs immediate or long-term support, and whether it should be internal or external.
The adviser will need to consider the specific struggles the client is grappling with, and then try to determine what personalised support would benefit them most.
5. Failure to record when clients are not vulnerable
It is not just about recording if someone is vulnerable. In fact, in order to compile the most comprehensive records, advisers should also keep thorough records of clients who they have recorded as not being vulnerable too. This is essential and something we see missed time and time again.
And of course, any vulnerabilities that are identified, as well as any actions or interventions that are taken to provide support, should be comprehensively recorded too in a way that can be recovered and acted upon at a later date.
We know that the FCA will be conducting a new review into firms’ understanding and response to the needs of vulnerable customers.
With the findings due to be shared by the end of the year, the regulator is now assessing the fair treatment of clients in vulnerable circumstances and judging whether the outcomes they receive are as good as those of other consumers.
