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A Best Practice Guide: our five top tips when working with vulnerable clients

In March 2024, the FCA announced that it 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 assessing the fair treatment of clients in vulnerable circumstances, and judging whether the outcomes they receive are as good as those of other consumers.


At Comentis, we believe that firms should have processes in place for identifying and supporting vulnerable clients. That said, we understand that it’s something which is much easier said than done. Clients rarely consider themselves vulnerable, and those who do often want to remain under the radar, using surprisingly effective coping mechanisms to hide or mask their vulnerabilities. Then there’s the act itself of identification. It’s often 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.


To counter these challenges, we recommend firms implement a simple three-stage process.  


1.       Advisors must be able to consistently identify all vulnerable clients. Arguably this is the most important part of the process. It doesn’t matter how robust a firm’s vulnerability interventions and processes are, if the identification process isn’t done correctly upfront, then any interventions after that will be fruitless.

2.       There needs to be plans in place to support any vulnerable clients that are identified. In many cases this is likely to be small changes to your advice process, but ones that can make all the difference to your clients.

3.       Every stage of the process must be thoroughly documented and reported on. For both your own benefit, but also for the regulator.


Whilst this three-stage process is a good overarching strategy for firms to work to, there are a number of best practice tips that will put advisors in a considerably stronger position to identify and support their vulnerable clients.


Here are our five top tips when working with vulnerable clients:


1.       Assess every client: In order for this process to work, it has to be consistent. That means every client has to be assessed in the exact same way by the advisor. For instance, it isn’t enough to assume that if a client is wealthy, they can’t be at risk. Vulnerability is complex, and anyone can be susceptible. With that in mind, the first thing to get right is ensuring that advisors are assessing every client for the same signs of vulnerability.


2.       Look for the triggers: The FCA 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’s a tendency to see these as fixed, but the reality is that no two people will have exactly the same combination. In any case, determining whether one – or indeed more – of these triggers are present should be an advisor’s first port of call when assessing a client for signs of vulnerability.


3.       Identify the causative nexus: Once a potential trigger has been identified, understanding the concept of the causative nexus is fundamental to determining how best to support that client. Ultimately, this hinges on the idea that it isn’t a circumstance or trigger that makes someone vulnerable. Instead, it’s their unique emotional, physical, or psychological response.  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 advisor understands the impact of the circumstance on the individual, they can then use this information to identify how best they should offer support.


4.       Tailor your approach for each client: Not all vulnerabilities can be responded to in the same way. For instance, a client who is struggling with their memory as a result of dementia may require more in the way of written material than someone who is going through a divorce or moving home. As part of our Vulnerability Support Framework, we have developed a Vulnerability Quadrant to help determine the support a vulnerable client might need. This tool encourages advisors to consider whether the client needs immediate or long-term support, and whether it should be internal or external.

For instance, immediate-internal support may involve allowing scheduling a longer meeting with a client the advisor knows will require additional time to process information. On the other hand, long-term-external support may involve keeping a client’s attorney regularly updated on your dealings, to ensure their best interests are being met. In short, the advisor 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.       Record all vulnerabilities: Any vulnerabilities that are identified, as well as any actions or interventions that are taken to provide support, should be comprehensively recorded. This will be vital, given the FCA’s new review, and must be done consistently across the entire client base, in a way that can be recovered and acted upon at a later date. That said, building vulnerability data doesn’t just mean keeping track of vulnerable clients. In order to compile the most comprehensive records, advisors should keep thorough records of clients who they have identified as not being vulnerable, too.


Identifying and supporting vulnerable clients is difficult. But with this best-practice guide, advisors will be well-equipped to bring the process of identifying, supporting, and reporting into their firm’s processes.

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