Vulnerable clients

inclusive financial planning

Vulnerable clients

Vulnerable clients are what the CII’s Inclusive Financial Planning Exam is all about. So if you are planning to sit it, this blog’s for you. I will focus on just two key questions – what is a vulnerable client and where can you find the resources to answer the assignments?

If you want to know more about the CII’s Inclusive Financial Planning exam, click here.

Before I start, please note that this blog does not refer to any specific Inclusive Financial Planning exam assignment. The CII rules preclude a third party from providing any support to you that is specific to your assignment.

What do we mean by a vulnerable client?

For many people, a vulnerable client is one that has an illness or is over a certain age. By definition, this only applies to a small proportion of clients in a typical firm.

But make no mistake – vulnerable clients is a key part of the FCA’s current and future agenda. Why? The Financial Lives Survey 2017 identified that around half of UK adults have one or more characteristics of a vulnerable person. Wow – half your clients are likely to be vulnerable in some way.

How so? The FCA have set out four broad characteristics of a vulnerable client. Some of these will be easily understood – particularly those under the heading of ‘health’. But what about a ‘life event’ such as retirement?

Vulnerability might include those who are forced to retire early through ill-health or those in drawdown who take a high rate of withdrawal. What about people who have limited experience of financial matters or those that realise (too late) that they don’t have the income they need in retirement?

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Source: based on FCA GC19/3, July 2019

The more you look into this subject, the more you realise it is likely to apply to most of your clients at some stage of their life.

So what does your firm do about it? How well do staff understand ‘vulnerability’ and how do you treat customers differently because of this? How do you recognise vulnerability and record it? If you are responsible for the advice process in a firm, what should governance and oversight look like? These are the sort of questions that the CII’s Inclusive Financial Planning exam is likely to address.

Resources for Inclusive Financial Planning

Where do you start researching for this exam? When you enrol, you will have access on the CII’s RevisionMate system to the study texts for CF8 (Long term care insurance) and ER1 (Equity release). It is possible that a specific assignment will include a client who is considering, for example, equity release or an immediate needs annuity but this is very much assignment-specific.

Reading the Assignment exemplars and guidance provided on RevisionMate should be compulsory reading for everyone sitting this exam. They show how assignments should/should not be set out and are the closest thing there is to an ‘exam guide’.

Other than the two study texts, the Inclusive Financial Planning exam does not provide any suggested reading. A level 6 exam such as Inclusive Financial Planning is degree standard. This means you’ll need to undertake your own research and work so you’re going to have to use the internet widely. Here are some suggestions to start you off (as at Nov 2020):

Customer Vulnerability (Occasional Paper Number 8), FCA, February 2015

Guidance for firms on the fair treatment of vulnerable customers (GC19/3), FCA, July 2019

CII CF8 Study text (available via RevisionMate) – the content in Chapters 7 and 8 will apply to many scenarios in some way.

Understanding the financial lives of UK adults, FCA Survey, 2017

Treating vulnerable customers fairly, FCA website and video

Ageing population and financial services, FCA Occasional paper number 31, September 2017

Addressing customer vulnerability, guide, ABI website

Vulnerable clients, Just Retirement website and video

Meeting the needs of vulnerable clients, PFS Good Practice Guide, 2017

Forces Moneyplan initiative, PFS, website

Assignment 1 will have a heavy technical emphasis so specific technical research may be needed for this assignment. Suggested sources include:

Just retirement

Scottish Widows

Prudential

Techlink Professional

Remember that things constantly change so use these references as nothing more than a start.

I hope that this this has been useful and gives you a starting point. If you want to know more about the ‘technique’ required to pass a Inclusive Financial Planning assignment, click here.

Ian Patterson

Ex-examiner and author of the current CII study texts for CF8, J07 and AF6.

Marie Patterson
Ian Patterson