How do you define a vulnerable client?

Jacqueline Lockie CFPTM Chartered FCSI, CISI deputy head of financial planning, discusses the ethics around identifying and best serving vulnerable clients


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What thought springs to mind when I say vulnerable client? Is it of a little old lady wobbling on her walking stick perhaps? You would be forgiven for thinking that but in fact this term is much broader and wide-ranging than that, as I discovered when I attended the CISI's IFP Forum (financial planning) meeting with the Society of Trust and Estate Practitioners (STEP) in March.

The FCA definition requires advisers to classify vulnerable clients as those whom are especially susceptible to detriment. So, it is irrespective of age. Now I'm sure you all know about the COBS rules that cover this area (9.2.1/9.2.2) and the impact of the Mental Incapacity Act. It could be argued that there are sections of the public that are easily identifiable as vulnerable. So, does age play any part? Yes, it does.

The Financial Ombudsman Service has detailed many criteria on which they establish if any advice given to a complainant or their family is suitable – and the top of their list of criteria is age!
What can paraplanners do?You should have a clear written policy on how to deal with vulnerable clients whatever their age. This should cover both internal company communications, as well as communications with the clients themselves. From the CISI Forum discussions, I have listed the top suggested tips for creating a company policy:

  • Set an age over which the client is classed as vulnerable – such as 80. If you have been looking after a client for many years, who is 79, say, you should still class them as vulnerable once they pass 80. Why? Because you have to draw the line somewhere. And that 'somewhere' needs to be equitably applied whether they are new or existing clients. I understand your long-standing clients might complain.
  • When you are in a client meeting look for the following behaviours that may lead you to conclude that this particular client should be classed as vulnerable: the client asking you to speak slowly or repeat things, appearing short of breath, and if English is not their first language (when combined with other indicators such as age) and they are struggling to understand what you are saying. A client can be temporarily vulnerable too; think penniless individual who wins £5m on the lottery. Now you might disagree with me on this, but often people can struggle to come to terms with a sudden and large windfall.
How should you guide a vulnerable client?
  1. You might wish to discuss with your planner, after bearing in mind the points above, the possibility of inviting potential beneficiaries to the client meeting. However, be aware that in many cases the client might say, as Matthew Phillips from Thomas Miller Investment put it, "It's none of their damn business!"
  2. It is important to do a cashflow plan for these clients. This is because you need to clearly demonstrate how the money will be used, based on your assumptions, and how it will continue to support the client throughout their lives. It shows what action you can take without detriment to the client. Your firm is much less likely to lose a FOS case if you can prove this too.
  3. Have crystal clear communications and supporting documentation. Cut out waffle and as much jargon as you can.
  4. Seek clarification of understanding from the client at each step of the way if you are in the meeting – arguably you should be doing this with all clients, but it is especially important to document it.
  5. Think about how you will deal with vulnerable clients who might call with queries and speak to you. How will you know if they are vulnerable? How would you deal with them on the telephone?
  6. If the advice your firm gives includes a recommendation that a client take out a Lasting Powers of Attorney (both types), then make sure you check the Office of Public Guardian website and read the common mistakes document.
This article first appeared in Professional Paraplanner. Republished with permission.

Published: 29 Jun 2018
  • Financial Planning
  • Integrity & Ethics
  • Professional Paraplanner
  • vulnerable clients

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