Working in the professional sector means meeting clients from all walks of life, and some may need more support than others.

While some clients may have needs that are easy to identify, you may have others who are seemingly able and secure but have vulnerabilities that are harder to discern.

The Financial Conduct Authority (FCA) defines a vulnerable client as: “Someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”

This is a very broad definition and could encompass many people. Indeed, Royal London reports that 47% of UK adults show one or more characteristics of vulnerability.

Vulnerable clients may need support to make decisions in their own best interests, and professionals have a duty to ensure they are supported to the best of their ability.

Read on to find out how to identify signs of financial vulnerability.

Four key characteristics of vulnerability

Vulnerability can be broadly split into four groups, which contain many subcategories. The four groups are:

• Health – Physical disabilities, severe or long-term illness, hearing or visual impairments, mental health challenges, and cognitive disabilities.
• Life events – Caring responsibilities, bereavement, income shocks, loss of job, and separation or divorce.
• Resilience – Low or inconsistent income, being in debt, and a lack of support from family or friends.
• Capability – Learning difficulties, low English language skills, poor literacy or numeracy skills, lack of digital skills, and low financial knowledge or confidence.

While there are likely many more characteristics of vulnerability, these generalised groupings provide a framework that may make other traits more identifiable.

Identifying vulnerability can be challenging, but there are some common signs

You may have clients whose vulnerabilities are easily identifiable, or you may have others who are open to explaining them.

Meanwhile, some clients may not be direct in their explanation of their needs but might state them indirectly, such as by saying they are struggling to understand certain details. They may also make statements that indicate vulnerability, such as saying that their partner has died or that they have lost their job.

Other signs that can indicate vulnerabilities might include the client:

• Repeating themselves
• Appearing distressed
• Sounding overwhelmed
• Answering yes to everything but not keeping up with the conversation.

You may also be able to identify vulnerabilities outside of your client interactions by examining any data they have given you or any other professionals you’re partnered with. This could include:

• Late or missed payments
• Increased withdrawals from their pension, investments, or other income sources
• An insurance claim.

Moreover, you may be able to sense vulnerability simply because you have more or less contact with the client, as this could indicate a significant change in their life that they haven’t disclosed.

A range of strategies can help support vulnerable clients, including professional coordination

If you believe a client may be vulnerable, it’s important to adapt your approach and to work alongside other professionals to ensure they receive the right level of support.

For instance, financial planners and solicitors can collaborate to:

• Put a Lasting Power of Attorney in place and ensure the client’s wishes are understood
• Establish trusts to help manage and protect the client’s assets
• Plan for the client’s current or future care needs
• Support the client with debt management.

It may also be a good idea to speak with the client’s family, though this will depend on their situation.

Beyond these formal arrangements, there are also everyday steps you can take to support vulnerable clients, including:

• Ensuring flexibility in your processes, such as offering alternative ways to give instructions or approvals depending on the client’s needs.
• Introducing protective measures for clients who may be prone to making impulsive or uninformed decisions.
• Using simple or plain language where possible to ensure key points are understood.
• Recognising trigger points and ensuring you respond appropriately.

Ultimately, supporting vulnerable clients is about using your professional expertise while remaining adaptable and sensitive to their needs. At every step, it’s important to ensure they feel safe and informed about any decisions they are making with your support.

Get in touch

To find out more about how we can collaborate for the benefit of our mutual clients, get in touch.

Email info@blueskyifas.co.uk or call us on 0118 987 6655.

Please note

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

All information is correct at the time of writing and is subject to change in the future.

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.

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.