How do we identify and cater for vulnerable clients?

Well, who is a vulnerable client?

We follow the Financial Conducts Authority's definition of a vulnerable client, which is “Someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”.

A client's level of vulnerability can change as their circumstances change. It may be permanent – such as a hearing or visual impairment, or temporary – such as a relationship breakdown or job loss. It can be fluctuating/sporadic – such as some mental health conditions.

Older age does not automatically mean that a client should be considered vulnerable but does mean that they could be more impacted if they experience another driver of vulnerability, such as bereavement or poor health.

There are four main areas of vulnerability:

• Health, including physical disability, severe or long-term illness, hearing or visual impairment, mental health condition, addiction and cognitive disability.
• Life Events, including significant events that can change someone's circumstances, bereavement, income shock, relationship breakdown, conviction, domestic abuse (including economic control) and caring responsibilities.
• Resilience, including lower ability to withstand difficulties, inadequate or erratic income, over-indebtedness, low savings and low emotional resilience.
• Capability, including extra barriers due to someone's abilities, learning difficulties, no or low access to support, poor literacy or numeracy skills, poor English language skills, poor or non-existent digital skills and low knowledge/confidence in managing finances.

A client's level of vulnerability can change and whilst a client may not be vulnerable, it might be that they could be more impacted if they were to experience another driver of vulnerability, such as bereavement or poor health.

What do we do?

We identify vulnerability and it is key that any characteristics of vulnerability are identified promptly, and we understand how best to support the client.

Clients may not realise that they would be categorised as vulnerable and so may not disclose their vulnerability directly. This means that when we communicate with clients, we need to be on the lookout for signs or triggers. Such triggers include difficulty in using technology, tearfulness, shortness of breath, mention of medication, signs of confusion or agitation, signs of physical disability, inability to retain information, such as repeating questions and information which indicates a recent divorce or bereavement.

We also must record client vulnerability. This is to make sure that we are aware of the client's vulnerability in future and means that the client will not have to repeat information.

The information to be recorded also includes whether any additional support required (e.g. tailored communication, nominated third party or alternative point of contact).

There are further recording requirements if the vulnerability relates to the client’s health, as this is ‘special category data’ which needs to be treated with a higher level of care. Explicit consent is needed to note this kind of vulnerability.

How do we manage vulnerability?

Our approach needs to be tailored to each client's individual circumstances and needs. Forms of support that may be offered include:

• Offering clients the option of having another person attend their review meetings (this should be offered to all Dentons Wealth clients from age 75)
• Encouraging the use of a Power of Attorney
• Creation of a new trustee to help run a client's SIPP
• Nomination of a third party to deal with all investment activities, or deal with one particular asset
• Requesting the removal of all funds, based on medical retirement (as appropriate)
• Providing signposting to organisations that can provide further support
• Establishing an alternative point of contact
• Agreeing a preferred communication method (face to face, phone, email, written communication)
• Agreeing a preferred time of day for communication (for example, when a carer is available or to allow for the effects of medications)
• Offering alternative communication methods (e.g. larger font).

The TEXAS Model

The TEXAS model is a tool we use to help staff when a characteristic of vulnerability has been identified in a client. This will assist the staff member in gaining a full understanding of how their vulnerability affects the client and assessing what, if any, additional support needs to be provided. It is particularly useful when discussing a client’s mental or physical health concerns. It can work in the following way:

We thank the client for providing the information:

“Thank you for letting me know about your change in circumstances”

We explain to the client how their information will be used and where the information will be shared:

“We'll use this information so that we can better support you, and we will not share any of this information outside the company”

We obtain explicit consent:

“Are you happy for us to hold this information? This will ensure that there is a record of your current circumstances for future correspondence.”

We ask key questions to help understand the client's individual circumstances and vulnerability being discussed:

“Do you have any troubles dealing with your pension scheme and if so, what are they?”

“What issues, if any, do you have in communicating with us?”

“Who helps you manage your finances?”

We signpost to internal or external help depending on the client's individual circumstances and vulnerability being discussed:

"Due to the circumstances you are facing, there are people we can put you in contact with to help provide you with more information."

Summary

The issue of client vulnerability is something we all need to aware of. The fact that it can change over time means that it is also something which we need address on an ongoing basis.

Additionally, we all need to know what we should be doing, as well as how we should be managing this most sensitive of issues. 

This article does not constitute financial advice, and you should always consider taking professional advice before making financial decisions. Indeed, it’s important to consider seeking professional advice to explore the best options for your needs. Your Dentons Adviser can help you work out the right option for your personal circumstances.