The four key areas of vulnerability

Published on 31st October 2025

Both financial and legal regulators are, and have been for some time now, keenly focused on client vulnerability or clients in vulnerable circumstances.

Professional financial planners must have, as part of the Financial Conduct Authority’s consumer duty, firm wide policies in place for identifying and supporting such clients. It is important to recognise when clients might be vulnerable and to understand this can be transient or permanent and to assist them appropriately and compassionately.

In our world, we think in terms of four key areas of vulnerability, and we thought it might be useful to share these, so you can think about your own business, how your teams identify clients in vulnerable circumstances and your own processes as a result.

Health

Health is perhaps the most obvious area in which vulnerability may be identified. This is particularly true for clients in later life, perhaps in retirement as age does bring an increasing likelihood of health conditions. For financial planners, understanding client characteristics, as they approach retirement plays an important role in effective client assessment.

There will be several aspects to consider, from recognising that accessibility or mobility issues may mean your office is not the best place for a meeting, to understanding any prevailing health conditions and adapting your approach appropriately.

As professional advisers, we also must be aware of the impact that stress, depression and anxiety can have on decision making. In your world, this might easily be recently bereaved clients or those going through divorce or separation. This, in turn, may influence how your firm refers such clients to other professionals such as financial planners.

Life events

As financial planners, understanding the fact that our clients’ situations change is at the very core of what we do.

However, for solicitors, who do not necessarily have the regular client relationship made easier with periodic plan reviews or other contact, such an understanding may not be so obvious.

The circumstances of a client first seen 20 years ago being advised today could be very different. Many positive things may have taken place, but the reality may also be that an event such as divorce, redundancy and bereavement, for example, may have occurred too.

Similarly, while it will be apparent that those needing care are vulnerable, the effects on their family members and carers should also be considered. New carers often face major changes and possible financial or emotional strain.

Indeed, the period in advance of the decision about care in the home or moving to a care home can be incredibly stressful for all concerned.

Resilience

It should also be recognised that clients having trouble in adapting to or managing the situation or circumstances giving rise to vulnerabilities may also find that limited emotional resilience amplifies these vulnerabilities.

Traumatic life events or even a scam could cause a serious loss of confidence or contribute to decline in mental or physical health.

As financial planners or indeed lawyers, we cannot be expected to have the knowledge of medical professionals, but an understanding of what a client’s support structure is or where help might be available would be good starting points.

Good practice might be to have recognised support services details on your own website.

For financial planners, considering potential future pitfalls or financial shocks is meat and drink, and will always be part of their review process. For example, how financially resilient is the client and would a downturn of funds severely impact their capacity for loss?

The impact of a financial loss, if incorrectly handled, could lead to a downward spiral of debt and perhaps this is why it is vital that, as law firms, you are referring your clients to carefully chosen financial planning partners at an early stage.

Capability

Most people just don’t have the knowledge or confidence in financial matters to navigate the complexities of financial planning, and this will be exactly the same when it comes to legal matters.

However, it is not just financial or legal literacy that’s the issue. The language and jargon that exist could also present a barrier to comprehension. How we describe our services on our sites and in our communications is therefore vitally important.

Indeed, reviewing web content and how we draft reports and recommendations for those with visual or hearing impairments might be a great first step, along with ensuring we do not use jargon. This must all be combined with a process to ensure the client has understood each stage, as assumption is the mother of all, well, you know.

Of course, we also need to be aware of a client’s mental capacity to make informed decisions. In some circumstances, assessment of mental capacity might involve the need to draw on other professionals and an awareness of the Mental Capacity Act 2005 may be required.

Obviously, we should accept that these four areas of focus are general and will not apply to every client. Individual circumstances and experiences can, of course, greatly impact the areas of vulnerability but being mindful of these factors when establishing your own firmwide processes for identifying and supporting clients in vulnerable circumstances may be sensible.