With vulnerability higher up the agenda than ever before – especially in light of the pandemic’s impact on financial security – advisers across the UK are paying even greater attention to the ways in which they identify and manage client vulnerability.
As part of our commitment to supporting the financial advice market, more2life launched its latest annual Vulnerability Survey of UK-based advisers operating in the later life lending space at the end of last year.
As ever, this provided some interesting insights into factors contributing to vulnerability, and the steps the sector needs to take to ensure the best outcomes for all later life lending borrowers.
Covid-19 accentuates long-standing causes of vulnerability
While it is natural that advisers see advanced age as the most common cause of client vulnerability, given that borrowers must be aged 55 and above to apply for a lifetime mortgage, there are various other sources which they need to be aware of.
Indeed, half of the respondents in our latest survey said that advanced age was the most common type of vulnerability they saw in clients in the past year, while a further 38% and 35% said significant financial worries (such as a large interest-only mortgage) and life-changing events (such as bereavement) as the cause.
Undoubtedly, Covid-19 and the resulting economic downturn has exacerbated some of these issues. Findings from the Financial Conduct Authority show that the over-55s have suffered the largest cuts to their earnings of all age groups, and were just as likely to have been made redundant since the start of the pandemic as those aged 20 to 39. In addition, a volatile stock market has squeezed pension pots, meaning this group face funding their later years with less pension income than they may have expected pre-pandemic.
For advisers in the later life lending market, spotting and managing these vulnerable customers has also been impacted by the fall in face-to-face meetings. Every single adviser questioned as part of our research noted that the restrictions on in-person contact with clients had made it harder to spot signs of vulnerability. Almost a third (30%) agreed that the increased difficulty of involving family during this time had also made this more challenging.
Advisers adapt long-standing practices to overcome new stresses
However, despite these difficulties, the advice sector has responded strongly to the challenge. Virtual meetings, document-signings, and identity checks are now common practice in many advice firms, while almost two thirds (63%) of advisers agreed that the education and training on supporting client vulnerability had improved throughout the past year.
Lenders have also worked hard to equip advisers with the tools and knowledge to successfully identify vulnerability, with many launching education and resource centres to help empower advisers to confidently discuss later life lending remotely. Our Learning Lab is one such example. We use this to offer CII-accredited webinars, demonstrations, and videos to ensure our adviser partners have access to specialist support when speaking to clients.
Next steps for the sector
Our survey also showed that advisers are clear on what steps the sector needs to take to ensure it offers appropriate levels of care. Three in four advisers agreed that greater family involvement would be beneficial in 2022, while the remainder largely agreed that the answer lay with further product innovation or training for advisers.
Lenders have a key role to play here too. We’re bolstering our teams, back-end processing systems, and educational resources as part of our ongoing commitment to supporting advisers and their clients. Though 2022 is set to be another financially difficult year for many, clear strides have been taken by the adviser industry to support those most likely to be impacted.
We are confident that our next Vulnerability Survey will reveal that the sector has built on these successes.
Stuart Wilson, corporate marketing director, more2life
