5 ways a financial planner can identify and support vulnerable clients

You can never tell what challenges people face in their personal lives, even if they appear fine on the surface. Some of your clients might be vulnerable in certain ways and this could mean that they’re at greater risk of financial scams or sub-optimal decision-making.

Typically, when we think of vulnerable clients, we picture older people, often with conditions such as dementia, or people with disabilities. However, there are many reasons why a client might be considered vulnerable, and they can be broken down into four main categories:

  • Health – people with conditions that make it difficult to carry out basic day-to-day tasks. This includes cognitive conditions such as dementia as well as physical disabilities.
  • Life events – certain difficult life events such as bereavement, divorce, or job loss can make somebody temporarily vulnerable.
  • Resilience – people with low ability to withstand financial or emotional shocks.
  • Capability – people who lack financial knowledge or have low confidence about managing money.

Fortunately, financial planners can help these clients protect their wealth and achieve their goals.

Read on to learn five ways financial planners can identify and support vulnerable clients.

1. Building trust with clients and assessing their needs

Trust is an important part of the relationship between financial planners and their clients. During their early meetings with their planner, your clients will explain their financial situation and discuss their goals.

Their financial planner will then assess their needs and create a financial plan. During this process, a financial planner builds trust and develops a relationship with their clients. This means that they may be able to identify any potential vulnerabilities that others could miss.

Additionally, their in-depth knowledge of financial matters means that planners may be well-positioned to spot certain indicators of vulnerability. For example, they might notice unusual payments coming from a client’s bank account or pick up on impulsive decisions. They may also see signs of financial abuse when working with couples.

Once they see these red flags, a financial planner can then take specific steps to support clients and protect their wealth.

2. Performing due diligence on financial products

Vulnerable clients might be more likely to fall victim to financial scams for several reasons. For instance, an elderly person could become confused by unsolicited phone calls and inadvertently share their bank details. Similarly, somebody with limited financial knowledge might not be able to spot an investment scam when approached on social media.

These kinds of scams pose a significant risk as Money Marketing reports that £2.6 billion has been stolen through investment fraud since 2020.

A financial planner can protect your vulnerable clients from these kinds of scams by performing due diligence on any financial products. For instance, if your clients want to invest their wealth, they can discuss this with their financial planner to ensure their chosen investments are legitimate and align with their financial goals.

A financial planner can also perform the necessary checks and balances if your clients want to move their pension savings to a new scheme. If a planner believes the scheme that the client wants to transfer their savings into is fraudulent or the transfer isn’t in the client’s best interests, they can advise against it.

3. Communicating with clients in diverse ways

Vulnerable clients may prefer to communicate with their financial planner in different ways, depending on their situation. For example, somebody with mobility issues might find it easier to meet with their planner virtually using video conferencing software.

Conversely, elderly clients might have difficulty with digital communications and would prefer paper instead.

A good financial planner will make use of various communication methods and find ones that are best suited to the client.

Additionally, financial planners are experienced in explaining complex financial topics in an easily digestible way. This may be particularly useful for vulnerable clients who lack financial knowledge or have reduced cognitive ability.

4. Providing an objective sounding board

In some cases, vulnerable clients may make decisions that don’t align with their financial plan. If they’re experiencing a difficult life event such as a bereavement or divorce, the emotional distress could cloud their judgment.

Any rushed decisions might affect a client’s long-term financial wellbeing but a financial planner may be able to prevent this. They can act as an objective sounding board for clients to discuss any potential decisions.

This can be incredibly valuable for vulnerable clients who let heightened emotions guide their decisions. By talking it over and assessing the pros and cons, clients can make more informed choices that support their financial goals.

5. Directing clients to relevant support networks

Financial planners can support vulnerable clients in many ways, but there are certain situations when more intervention may be needed. For example, if a client is showing signs of a serious health condition such as dementia, or a planner suspects they may be a victim of financial abuse, the planner might need to take action.

They may talk to family members about the situation and recommend a health assessment, if necessary. Additionally, they can signpost support networks that could help clients manage their vulnerabilities. This might include bereavement support services, financial education resources, or debt management help.

Get in touch

If you have clients that you think may be vulnerable, they might benefit from working with a financial planner.

They can contact us at hello@ardentuk.com or call 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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