How Technology Can Help Identify Financial Vulnerability in Retirement

By Jonathan Barrett, CEO at Comentis

With significant financial decisions in later life – such as choosing how to take retirement income, managing pension drawdown, or planning for care costs – many clients face growing financial pressures. Clients are often navigating complex and interrelated circumstances, including rising living costs, housing insecurity, changes to pension access, chronic health issues, cognitive decline, bereavement, or supporting dependants.

Given the scale and long-term impact of these decisions, it is imperative that clients are carefully assessed for any risk of vulnerability before recommendations are made.

For a trained clinician, this is something that could be done manually. But for a retirement adviser, who may not have that same background or clinical expertise, digital tools present the most reliable way to identify when a client may be vulnerable.

Why is technology required?

For those without specialist knowledge of vulnerability, and even for those with it, spotting at-risk clients is a challenging task without some form of structured support.

It is easy to assume that if a client can afford the recommended plan – whether an annuity, drawdown product, or equity release – they are not financially vulnerable. This is especially true when advising clients with high financial literacy, large pension pots or high property values. However, this assumption can lead to vulnerabilities being missed, particularly when the assessment is based solely on financial – or financial capability – indicators. In some cases, firms may conclude, incorrectly, that they have no vulnerable clients at all.

Vulnerability can stem from illness, bereavement, caregiving responsibilities, loss of resilience or confidence, or even the cognitive changes that may accompany ageing. These are all triggers highlighted by the FCA. What often makes a person vulnerable is not the event itself, but how they are emotionally, mentally, or cognitively affected by it.

Recognising these factors is essential. It protects the client and helps the firm meet regulatory expectations. With the Consumer Duty now in effect, the need to evidence fair outcomes and tailored support is more important than ever.

Another complication is that many older clients may not disclose vulnerability. There can be a sense of shame, embarrassment, or simply a lack of awareness that their situation may be affecting their decision-making. According to FCA research, a significant number of vulnerable individuals do not inform their provider, which means firms must take a proactive and sensitive approach.

Although advisers are expected to identify vulnerability in each case and to record how they are doing so, it is not reasonable to expect them to do this consistently and accurately without help. Digital tools provide a practical and scalable solution.

How technology can help

The FCA continues to publish guidance on supporting vulnerable customers, including material specific to later-life planning and financial resilience. Providers like Just Retirement have also responded by creating practical tools and resources for advisers. These include co-authoring the Vulnerability in Retirement guide with us and creating training modules tailored to this client group.

But training alone simply won’t be sufficient. As we’ve seen, identifying vulnerable customers is best approached with a third-party specialist platform.

A digital assessment, capable of accurately flagging financial vulnerability, removing subjectivity from the process and ensuring consistency across a whole client base, is arguably the only way to ensure all vulnerability drivers are constantly in scope. By combining clinical expertise with hard data, they provide reassurance that a firm’s controls will stand up to regulatory scrutiny. More than that, they remove the pressure on advisers to make clinical judgements unaided.

A better outcome for all

This approach benefits everyone. Clients receive more thoughtful, appropriate advice, tailored to their individual needs and circumstances, helping them to make informed decisions with greater confidence.

For firms, digital assessments bring clarity and consistency to what is often a complex and sensitive area. They provide a clear audit trail, reduce reliance on instinct alone, and ensure that vulnerability is considered as an integral part of the advice process.

For advisers working with later-life clients, these tools are more relevant than ever. Clients in this demographic may be dealing with increased – and often hidden – needs, along with growing anxieties about the future. These factors can significantly affect their ability to engage with advice and make informed decisions. Recognising and addressing this vulnerability is no longer just good practice, it is central to delivering conscientious, compliant and responsible financial planning.

If your current approach could be strengthened, or if you know additional support is needed to meet regulatory requirements, now is the time to act. The right tools are already available and are designed to support you, your clients, and your firm in achieving better outcomes for all.