Vulnerability and capability

Jacqueline Lockie CFP™ Chartered FCSI, CISI head of financial planning, explains via a mother-daughter case study that vulnerability does not necessarily mean a client is incapable of making good financial decisions

mother daughter adviser
In November 2019 I wrote about vulnerability and the recent FCA guidance paper. Following on from that I have come across some good examples that I believe are worth thinking through together.

In a nutshell, what do we mean when we say someone is vulnerable? Does it automatically mean that they are not capable of making any financial decisions? Already I can hear you saying: “What is she on about? Of course, we know the difference!” Let me explain …

Recently, I was discussing a case study with a group of advisers. It was a mother and daughter – mother with early stage dementia and daughter keeping an eye on her mum, while also being a single mum to a young school age child and holding down a full-time job.

Being in the sandwich generation, as we affectionately call it, can bring huge pressures and in this scenario we were discussing who was vulnerable and who might be the most vulnerable: the mum with early stage seemingly manageable dementia, or the daughter charging around trying to do the best she can but feeling the pressures of caring for two generations at the same time.

I think we’d all agree that the mum with dementia is potentially vulnerable. And possibly the daughter too, depending on how she is managing. Some people manage OK in these sorts of situations, and so, while I might initially flag her as potentially vulnerable too, I would meet and discuss things through with her at length to assess how she is feeling. I might treat her as vulnerable until I have evidence to the contrary to be on the safe side. But is that right? Shouldn’t I treat her as not vulnerable until I have evidence to the contrary?
If the mum cannot make financial decisions for parts of the day, we should wait to help her make those decisions at some point Let’s say now that Mum’s health starts to deteriorate and so the pressures ramp up for the daughter. We all agree that both the mum and daughter are now vulnerable. But who is capable of making financial decisions? Classing them both as vulnerable, does that mean both should now be treated as incapable of making financial decisions? 

In my experience, the mum might still be able to make decisions and I know that doctors are very reluctant to sign someone off as not being able to make financial decisions. Even if the mum could not make those decisions for large parts of any given day, we should still wait to help her make those decisions at some point. Now you might think, that’s not right surely. Well, it most certainly is, and I have personal experience of just this happening. Once doctors sign to say that the mum is not capable, you are into Lasting Powers of Attorney or Office of Public Guardianship territory.

But what about the daughter? Yes, she is vulnerable but if we treat her as incapable of making the financial decisions, both mum and daughter might find themselves in a very difficult situation. The daughter should still be able to make those decisions unless her mental health suffers significantly. But she is still vulnerable. We might offer her more time to think about the ramifications of the advice we are giving. We might offer her meetings at her home or be more flexible on appointment times. We might offer shorter meetings of 30 to 40 minutes to ensure that the information is digested in bite-sized chunks so that she can make the critical decisions first.

Doing all these things to help the vulnerable daughter does not make her incapable of making good financial decisions. Please remember not to mix up your terminology and let’s not assume that all those who are vulnerable, are not capable of making financial decisions. And don’t forget to evidence it!

This article first appears in the December 2019 edition of Professional Paraplanner. Republished with permission.
Published: 21 Jan 2020
  • Financial Planning
  • dementia
  • Professional Paraplanner
  • vulnerable clients

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