Over-45s more likely to share vulnerability with proactive advisers

Most over-45s who have experienced vulnerability have not told their financial adviser but would be more likely to if the advice firm had taken proactive steps to educate them, new research by Just Group has suggested.

The retirement specialist found that seven in 10 (72%) had experienced one or more life events that could result in vulnerability, such as physical or mental health problems, bereavement, job loss or relationship breakdown.

However, Just Group also found that of this group, only 16% mentioned the circumstances to their adviser.

Group communications director at Just Group, Stephen Lowe, warned that the numbers of clients willing to disclose potential vulnerability are “worryingly low”.

“There is increasing scrutiny on advisers to identify and support vulnerable customers, but the research shows the majority of people are unlikely to voluntarily divulge their own vulnerability,” he commented. “Among the reasons given for people not to mention it was that they felt it was not relevant to their adviser or future plans, that they weren’t asked, or they were just embarrassed.”

Just Group’s research, based on a study among 2,206 UK adults, suggested that clients would be more willing to divulge information about vulnerability if their advice firm was more proactive with engagement and education. Among the ideas that found favour were providing clients with checklists, emphasising the importance of disclosure, as well as asking more questions, the retirement specialist stated.

In about a third of cases, however, respondents said disclosure made no difference. Lowe added that some important conclusions could be drawn from the Just Group research about how a firm could go forward with their vulnerable customer strategy in future.

“Clients seem much more likely to talk about their circumstances if the adviser has previously highlighted it as important and expected,” Lowe said. “That means touchpoints such as reviews and communications should be used to educate and reinforce the message about vulnerability.

“While the majority may react positively to this kind of active engagement, that still leaves a sizeable rump of clients who still may resist. There is an opportunity for the industry to keep working together and sharing best practice to ensure we can meet our regulatory responsibilities.”

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