Vulnerable Clients

My sister was divorced recently and is struggling to deal with the financial aspects of her life.  She had a lump sum as part of her settlement but it’s just sitting in her current account doing nothing – she says she wants to use it to fund her retirement but keeps avoiding discussions about putting it into a pension.  She never dealt with finances before as her ex-husband did it all.  I’ve told her she should get some advice but she’s worried that a financial adviser will think she’s stupid.  What do you suggest?

Carl Responds

It’s not unusual for divorcees to feel uncertain and set adrift in their new lives, particularly if they haven’t dealt with financial matters in the past.  Your sister would certainly benefit from some independent financial advice, but her adviser should take extra care to ensure that she is comfortable with both the discussions and any action she might take.

In fact, your sister sounds like she is what we call a vulnerable client and would get extra careful treatment from most advice firms.   A vulnerable client is one who cannot easily make a decision because of ill-health, stress, undue influence, unexpected circumstances or any other situation that might impair their judgement.  Vulnerability can be long-term or just occur for a short while during a period of change in their lives, for example.

We have procedures in place to protect and safeguard vulnerable clients which might include involving a friend or family member in discussions, taking more time to explain the analysis and advice we give, or finding other ways to make your sister feel safe.  We’ve also committed to supporting the Financial Vulnerability Taskforce’s Charter, providing a safe pair of hands for those in vulnerable circumstances.

Retirement planning is complicated:  we are used to dealing with people who are unsure about how to approach this subject.  Ascertaining what she knows and understands about financial matters is part of the process we go through when we first advise a client.

If your sister is happy to share her financial discussions with you, perhaps you should suggest you accompany her to meet an adviser.

Your sister’s future financial security will depend on her having the right measures in place to provide her retirement income.  This is too important for her to hide her head in the sand for very long, so I hope you can convince her that an independent financial adviser from a firm of Chartered Financial Planners – the highest designation in financial advice – will treat her with kindness, patience and professionalism.

Any opinions expressed in this article do not constitute advice.  The value of an investment and the income from it could go down as well as up.  The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.