How savvy business owners can identify and help financially vulnerable clients

If you’re a business owner who works closely with your clients, you know that everybody’s needs are different. While it may not always be easy to assess your clients’ needs when they don’t openly state them, learning to read between the lines and pinpoint the help they require is truly an invaluable skill.

When it comes to financial needs, you may have some clients using your service who face more challenges than others. If your clients are experiencing financial vulnerabilities or stressors, this could impede their ability to run their own businesses, further their goals, or even live their lives safely and efficiently day-to-day.

To tackle rising financial vulnerability, in 2021 the Financial Conduct Authority (FCA) set out guidelines for identifying key elements that define the term. They claim 27.7 million people now have characteristics that could make them financially vulnerable.

These factors include:

• Ill health or disability making it difficult for an individual to access a service
• Low resilience towards financial stress
• An emotional or financial shock having an impact on their lives.

As an accountant, solicitor, or other business owner who works closely with treasured clients, you may have vulnerable individuals using your service. Or, your business owner clients could be missing key vulnerability characteristics in their own clients.

Read on to find out how to better identify vulnerability in clients, and how introducing them to a financial planner could help everyone involved.

Scams, a lack of protection, and the digitalisation of finances can all prove risky for vulnerable clients

Before we discuss how to recognise vulnerability, it is important to stress why recognising the financial challenges posed to vulnerable individuals is so crucial.

Indeed, there are increasing risks in today’s financial landscape, posing numerous challenges to all people – and for those with additional needs, either emotional or physical, it could present a heightened level of risk.

For example, UK Finance’s Annual Fraud Report 2022 found that in 2021, more than £1.3 billion was stolen from individuals by fraudsters posing as trusted institutions.

In addition, 2022 research from Canada Life reveals 80% of UK adults do not have a Lasting Power of Attorney (LPA) in place. An LPA allows an attorney, selected by you, to make important health and financial decisions on your behalf if you become incapacitated.

What’s more, the Evening Standard reports that 5,162 bank branches have closed since January 2015, posing a challenge to older or disabled clients who may prefer or require in-person transactions.

These are just three examples of how the UK’s financial landscape could be difficult to navigate for vulnerable clients. Learning to recognise when a client could be disproportionately exposed to these risks, and taking steps to help protect their wealth, could make a huge difference.

Learning how to identify financial vulnerability is an invaluable skill for a business owner

While you may be aware of key issues that might make a client vulnerable, and how to help them, your clients may not always be forthcoming about the challenges they face.

Learning to read signs of financial difficulty in a client’s personal life, without making harmful assumptions, can be tricky.

Here are some potential signs that a client could be financially vulnerable.

• A client who is usually pleasant to speak with becomes easily irritated, impatient, or emotional.
• They are vague or evasive about the subject, refusing to give specifics when necessary.
• The client experiences a bereavement, job loss, sudden relocation, serious illness, injury or another drastic change in their life.
• They express worry, doubt, or even a lack of understanding about certain aspects of their wealth, such as protection, online banking, investing, or property matters.

By simply learning to prioritise empathy and practising reading between the lines, you could improve your “soft skills” and invite a healthy conversation with your more vulnerable clients.

You never know where these conversations could lead – but ultimately, you will have a deeper understanding of this person, their needs, their goals, and their history. This can only help you provide a better service to them, and may help strengthen your long-term professional partnership.

Introducing vulnerable clients to a financial planner can help keep their wealth safe

Introducing your clients to a financial planner can be one of the simplest, and most effective, ways of managing financial vulnerabilities.

We can help vulnerable clients to:

• Protect their wealth against certain risk factors, such as a sudden loss of income, or becoming mentally or physically incapacitated
• Create a financial plan that helps meet their needs and goals in the coming years
• Understand how to access their cash, investments, pensions, or any other finances in a way that suits them
• Write and update their will
• Manage any additional funding or income they receive, such as a personal health budget
• Gain the confidence to invest, spend, and save their money responsibly and tax-efficiently.

We can act as a confidant for clients experiencing financial stress or difficulty and can help individuals protect and grow their wealth, no matter their circumstances.

Get in touch

We’re here to advise you and your clients on all aspects of financial planning. If you have vulnerable clients that would benefit from advice, or if you’re interested in learning how you can work more closely with us, please get in touch. Email enquiries@prosserknowles.co.uk or call 01905 619 100.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

The value of your investment 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.