Vulnerability and older clients: How firms are responding

3 min read 2 Mar 21

It probably came as little surprise to anyone that according to FCA research, the number of UK adults showing characteristics of vulnerability has increased during the Covid-19 pandemic.

In an update to its Financial Lives 2020 Survey, the regulator found that between the end of February 2020 (i.e. just before the first lockdown) and October 2020, the number of adults with characteristics of vulnerability increased by 3.7 million to 27.7 million – or 53% of the UK adult population.

How advisers are tackling vulnerability

We all hope that the final lifting of lockdown scheduled for June 2021 will ease vulnerabilities linked to employment, financial and health concerns. But the FCA’s research brings home the need to acknowledge the personal challenges clients face that go beyond their saving and investment goals.

Most advisers are already well aware of this need: in our 2020 Centralised Retirement Propositions Report, only six advisers out of 200 (3%) said they had never had to manage a vulnerable client.

What is a vulnerable client?

A vulnerable client – in financial regulatory terms – can refer to anyone who, due to their personal circumstances is susceptible to harm, especially where a firm is not acting with appropriate levels of care.

The FCA has defined four drivers of vulnerability: poor health, such as cognitive impairment, life events such as new caring responsibilities, low resilience to cope with financial or emotional shocks and low capability, such as poor literacy or numeracy skills. 


The FCA is keen to see such vulnerabilities properly managed when individuals come into contact with any type of regulated firm. It published finalised guidance on the issue in February.

Many firms, particularly sole traders, reported in 2020 that they look to address vulnerability on a case-by-case basis. But firm-wide policies are also common. Alongside flagging vulnerability on client records, this often involves inviting a friend or family member to attend meetings. One firm even looks to pre-empt future vulnerability by inviting clients to give permission to discuss their circumstances with someone else if the firm has concerns about the client’s own capability.

Vulnerability among retirees

The FCA reports that Covid-19 has had a disproportionate impact on those of working age, notably among younger adults aged 18-34 and the self-employed. In contrast, retirees saw a small proportionate decrease in the numbers with characteristics of vulnerability.

But there are many factors that can increase vulnerability with age – from deteriorating physical health to reduced mental capability – that can make the advice process for older clients more challenging.

It’s notable that in our 2021 Centralised Retirement Propositions Report, 59% of advisers say it’s important to meet with clients’ dependants. This is primarily so that the needs of both generations can be addressed when constructing a retirement plan and managing intergenerational wealth transfer. 

But it’s also important in enabling a client’s support network to know their plans and provide continuity if a client’s ability to make financial decisions declines – complementing any Lasting Powers of Attorney (LPA) that are put in place.

Meeting the FCA’s expectations on vulnerable clients

Managing and supporting vulnerable consumers has become an area of growing focus for the FCA over the past six years. Following industry consultation, it published finalised guidance on the issue this February. It’s clear from this that firms are expected to embed fair treatment of vulnerable clients into every aspect of their policies and processes – and their culture.

Customer vulnerability across all age groups is becoming a growing issue in the wake of Covid-19. But with 60% of advised clients in or phasing into retirement on average, having the knowledge and processes in place to manage the particular vulnerabilities that come with old age may be a commercial and regulatory advantage.

Find out more in our retirement strategy research including considerations for older clients and intergenerational wealth planning