Equity release lender More 2 Life surveyed 210 UK advisers and found nearly nine-out-of-10 advisers (87%) admitted that it was difficult to spot vulnerable customers.
This is potentially due to the fact that vulnerability is not a consistent state and can take a variety of different forms.
When asked what proportion of their client bank was vulnerable, 81% felt that less than a fifth fitted into this category.
This survey comes weeks after the Financial Conduct Authority (FCA) rolled out a consultation about the proposed guidance for firms on the fair treatment of vulnerable customers.
“Vulnerability is not a topic which is set to go away anytime soon as people are living longer lives but often much of that later life is spent in ill-health,” Sarah Waring, client and proposition director at Quilter Private Client Advisers, told International Adviser.
“This makes it critical that advisers have access to resources which enable them to both spot vulnerability and know how to best advise customers who could be vulnerable.
“As vulnerability can come in so many different forms and has an intentionally fluid definition, education is key to improving both financial planners and providers understanding of just what constitutes a vulnerable customer.”
Steve Webb, director of policy at Royal London, also said: “One aspect of vulnerability which all advisers will have to respond to is the impact of people living longer, in some cases with reduced mental capacity.
“In a world of pension freedoms where more people have choices throughout their retirement whilst fewer have the guaranteed income of an annuity or a defined benefit pension, advisers will need to ensure that vulnerable elderly people in particular are able to use those freedoms wisely.
“Advisers will also need to be on top of issues such as power of attorney, making sure that processes are in place to help vulnerable people make the right choices but also making sure they are protected from some who might try to take advantage of their diminished capability.”
Stephen Lowe, group communications director at Just Group, also said to IA: “Vulnerability is a complex and sensitive issue.
“Advisers working with vulnerable clients require a specialist skill set to ensure they can quickly spot when a client may be vulnerable and then take appropriate action, both to help the client and protect their business.
“There is a strong demand from advisers for guidance and support in working with vulnerable clients in advance of the expected increase in regulatory scrutiny in this area.
“The FCA’s recent consultation provides a good indication of where its policy on this subject is heading and we’ll be contributing to the debate on how best to make sure vulnerable customers are protected by our industry.”