Ultimately though, this is a choice they need to make themselves and they will have a far greater understanding of their own family’s dynamics.
Thorough information gathering
In the absence of face-to-face meetings, advisers need to adapt how they gather information to ensure they spot potential vulnerabilities. One way to achieve this is to follow a pre-prepared script of questions.
Asking clients personal questions can be difficult, but it may be possible to reassure clients by explaining that the questions will help to determine the right approach and that they are not about prying.
Advisers can also assess vulnerability by testing clients’ understanding of products. For example, they could explain how compound interest works in one meeting and then, in a subsequent session, ask the client to explain the concept themselves. It is important the client does not simply repeat the information, but actually demonstrates they understand. If in doubt, advisers could bring in a third-party expert who specialises in supporting vulnerable clients.
Other techniques for advisers to determine whether a client is vulnerable could include asking a greater number of personal questions or ensuring customers are answering questions directly without coaching from family.
Advisers should also ensure they record their meetings with clients, so they can capture the client’s precise wording and double-check whether they show signs of vulnerability.
Caring for vulnerable clients
When it comes to caring for vulnerable clients, there is also room for improvement across the wider financial services market.
The FCA has recognised this, confirming that it will be publishing finalised guidance on the fair treatment of vulnerable customers in the fourth quarter of 2020.
However, it has already said it wants to ensure the fair treatment of vulnerable customers is properly embedded by advice firms in their culture, policies and processes.
As part of its wider endeavours, the FCA is proposing to introduce a duty of care for financial advisers, which would create a legal obligation for them to act in the best interest of their clients and exercise reasonable care and skill when providing a product or service.
While this has not yet been formalised by the regulator, it is recommended that intermediaries who have not implemented a duty of care in their business do so now in the interests of both existing and future customers.
Lender support needed
It is clear that the wider equity release industry needs to step up too. First and foremost, greater education and resources on vulnerability is needed if more equity release advisers are to gain confidence in this area.
After all, practical guidance on how to spot the signs and deal with vulnerable clients would make their role as an adviser easier and improve outcomes for end-customers.
