Advisers identifying twice as many vulnerable customers as expertise grows

With vulnerability higher up the agenda than ever before for advisers in the later life lending market, advisers are becoming increasingly good at spotting the challenges customers face, according to new research from more2life.

Its survey found that 30% of advisers have seen clients in the last twelve-months that they considered to be vulnerable – up from 15% in 2021.

Interestingly, this increase appears to be driven by the reduction in advisers claiming clients have no signs of vulnerability, which dropped from 20% in 2021 to 12% in 2023, as well as an increase in those who believe 80% of clients they support face this challenge – up from 10% to 17%.

While recent economic factors will have had an impact on client vulnerability, the research recognizes the work by advisers over the last year to better interpret what creates a vulnerable customer, particularly with Consumer Duty regulation changes looming.

Given the current headlines around rising inflation, it comes as no surprise that almost one in three advisers (31%) said the most common type of vulnerability they saw was those financially impacted by the cost-of-living crisis.

Digging into the impact of the cost-of-living crisis, more2life found that 24% of advisers have found that clients were more financially stressed than before and 23% said those that they are speaking to have more clear needs and fewer aspirations.

Retirement incomes were being stretched with 15% saying clients were more likely to need to boost their income and 16% said they were more open to discussing options such as equity release.

That said, the primary reasons advisers identified customers as being vulnerable have remained consistent pre and post pandemic. Almost half (43%) of people are looking for support with financial challenges that are not related to the cost-of-living crisis such as an interest-only mortgage while others cite customers being of an advanced age (42%).

Ben Waugh, managing director of more2life, said: “The need to identify and support vulnerable customers has been a focus for the later life lending industry for some time and the upcoming Consumer Duty deadline has made this even more important. Today’s research suggests that advisers are becoming increasingly adept at identifying customers who need additional support and time to find the right options for their individual circumstances.

“While financial pressure from the cost-of-living crisis has been identified as a stressor for some, other challenges such worries around the need to repay interest-only mortgages, advanced age and dealing with a lifechanging event have remained consistent. The additional time and resources firms in this market have devoted to supporting these customers will pay dividends and consistent work to boost their understanding is vital."