Beth, our Clinical Lead, explains that financial vulnerability is a reality we all face, often closer than we realise.
Recently, during a conversation with a neighbour about my work in financial vulnerability, he expressed a common belief: that such vulnerability only affects others. With savings, a stable home life, and a good job, he felt immune to the risks. When I pointed out that we are all just two steps away from vulnerability, he was visibly taken aback.
The truth is, vulnerability exists on a broad spectrum. While we can build savings, set aside emergency funds, and enhance our financial literacy, it is not a trap exclusive to certain individuals. It is a dynamic landscape we all navigate, constantly avoiding potential pitfalls.
Let’s explore what vulnerability truly means and how finance professionals can support their vulnerable clients.
Understanding vulnerability is crucial. Many people mistakenly believe they are not at risk, often thinking vulnerability only applies later in life. However, as I explained to my neighbour, this is a misconception. Vulnerability can arise at any moment, often triggered by life or health events. For instance, if someone faces a cancer diagnosis or redundancy and manages it well, they may only take one step toward vulnerability. It is when resilience or resources are lacking that the second step is taken, leading to financial risk.
Recognizing this interplay is essential. Vulnerability does not exist in isolation; mental health, physical health, and work-life balance are interconnected. A physical illness can hinder work, impacting mental health and creating an overwhelming situation. Understanding this interconnectedness is vital for grasping the concept of vulnerability.
How can advisers apply this understanding?
To effectively support clients, finance professionals must recognize the nuanced nature of vulnerability. We all juggle various challenges, any of which could lead to vulnerability at any time. By humanizing the experience, we can relate to moments of struggle. If anyone can become vulnerable, how can we, as humans, clinical workers, and financial advisors, respond with empathy?
Some professionals may adopt a tick-box approach to identify signs of vulnerability, seeking rigid indicators. This method is ineffective. Advisors need systematic means to identify vulnerability signs accurately. A specialist assessment, grounded in data, is essential. Combining clinical expertise with data-driven assessments eliminates bias and subjectivity, ensuring that all vulnerability drivers are consistently considered across a client base.
Erasing the divide between perceived vulnerability and reality is crucial. Vulnerability is not a fixed boundary; it is a delicate threshold that shifts throughout our lives. None of us can predict what lies ahead, and we could all face struggles at any moment.
To address vulnerability effectively, we must deliver information empathetically and practically. Traditional webinars may not always suffice. Open communication with clients and tailored support for their unique challenges are vital. Establishing robust systems to identify vulnerable clients and provide timely support is essential.
Moreover, reframing financial vulnerability as financial wellbeing is important. This holistic, person-centred approach allows us to recognize clients' strengths rather than focusing solely on their challenges. Instead of asking what is lacking, we should consider how to enhance existing resilience. Normalizing discussions around financial wellbeing can reduce stigma and shift the focus from perceived inadequacies.
Ultimately, we must acknowledge that vulnerability is a shared human experience. Reflecting on our own circumstances can reveal how close we may be to vulnerability without realizing it. Whether we recognize it or not, we are all closer to financial vulnerability than we think
Comments