Advisers need to understand the potential vulnerability of clients

Michael Lloyd

June 25, 2019

Advisers have a duty of care to assess the potential vulnerability of later life clients and to ensure they can evidence the results of that assessment, Tim Farmer, founder of TSF Mental Capacity Assessors, has argued.

He was speaking at today’s National Later Life Adviser Conference, in association with the Equity Release Council, which took place at the Madejski Stadium, Reading, He said that it was difficult for advisers to assess vulnerability because of its likelihood to change.

Farmer said: “Vulnerability is fluid in nature and comes in a range of guises.

“Clients can be okay one day and not the next. They can move from a situation of temporary vulnerability to sporadic vulnerability to permanent vulnerability.

“Every client you see is potentially vulnerable and potentially susceptible; they can switch from being potentially vulnerability to being vulnerable to being highly vulnerable. And they also change between those states. The big question is how you as an adviser can pinpoint what is going on with them?”

Farmer defined vulnerability to delegates as the FCA sees it, plus looked at the main three contributing factors – individual, wider environmental factors, and activity/inactivity of lenders and others – to that vulnerability.

He said that advisers had to understand their client fully to ascertain what stage or state they may be at.

Farmer added: “You need to get to know them, to get to know their key life stages, because that will impact the advice you give, and influence their next life moments.”

He said that utilising the skills of a third-party assessor might head off potential difficulties for both adviser and client in the future.

Farmer said: “To a client you can say that by doing this, we’re evidencing that they know exactly what they’re doing, and that if it’s challenged in the future, we have that evidence available to deal with the challenge.”

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