How many people in the UK are considered as financially vulnerable?
In 2021, the FCA recorded over 27.7 million adults in the UK with characteristics of vulnerability*. Several factors which may contribute to vulnerability have only been recognised recently. Examples can include an individual’s mental health, or their level of financial education. It’s essential to work with clients to assess their level of vulnerability, as it can reduce their level of financial risk whilst having a beneficial impact on their long-term goals.
How would you know whether you are at risk?
According to the FCA, there are four key circumstances which increase an individual’s risk of vulnerability:
1 – Health
Some disabilities or illnesses may require an additional level of support.
2 - Life events
A change of personal circumstances, such as a relationship breakdown or bereavement may impact someone's emotional wellbeing.
3 – Low financial resilience
Financial markets can fluctuate over time, which can cause stress.
4 – Low capability
Knowledge of financial markets, managing money, financial education and digital literacy can impact the level of support required.
Why is it important to acknowledge financial vulnerability?
Acknowledging the risks of vulnerability allows our team to proactively support clients throughout their investment lifetime. Whilst some situations may appear more apparent, others are less so. For example, mental health concerns, or a recent bereavement may impact an individual’s emotional health, and their ability to make clear decisions.
In many instances, we often find that one partner within a relationship will undertake and manage most of the financial affairs. It can be difficult for those who experience bereavement, and a surviving partner may have less experience and confidence when it comes to managing investments.
For additional guidance and support, clients may opt for a change in their investment strategy – such as moving from Advisory to Discretionary Management. Depending on individual circumstances, an Investment Manager may also recommend electing a power of attorney, to support with decision making in the future.
Our investment teams also undertake vulnerable client training, including dementia training - helping them to provide a quality level of service and ongoing support for all clients. No matter how big or small a change in circumstances may be, it is important to discuss these concerns with an Investment Manager.
Investments can rise and fall in value, and you might get back less than you invest.