Why Supporting Vulnerable Clients Is Good Ethics and Smart Strategy

The FCA’s 2025 review delivers a clear message: whilst some financial advice firms have made commendable progress in improving outcomes for vulnerable clients, the majority still have significant work ahead. For forward-thinking financial planners, this isn’t just a compliance challenge—it’s a transformative business opportunity waiting to be seized.

Understanding Client Vulnerability: More Than Just Compliance

Vulnerability isn’t a rare exception in financial advice—it’s a possibility for any client at any time. Whether triggered by health issues, life events, reduced financial resilience, or limited capability, vulnerability fundamentally affects how clients experience financial advice and outcomes.

The FCA’s comprehensive approach identifies four key drivers of vulnerability: health, life events, resilience, and capability. Research consistently shows that people don’t perceive themselves as vulnerable, often failing to recognise characteristics outlined by the FCA as relevant enough to disclose to their adviser.

The Business Case: Why Vulnerability Creates Competitive Advantage

Supporting vulnerable clients isn’t merely about regulatory compliance—it’s about building trust, enhancing reputation, and creating meaningful differentiation in a crowded marketplace. Firms that develop consistent, thoughtful, and measurable processes for supporting vulnerable clients are positioning themselves for sustainable growth.

Key Strategic Opportunities

Tailored Assessment and Support: Modern tools like Financial Wellbeing Questionnaires, developed in collaboration with academic institutions, help assess emotional resilience, financial self-efficacy, and other psychological factors. This enables advisers to deliver personalised support that goes far beyond surface-level assessments, creating deeper client relationships and enhanced client experience.

Intelligent Technology Integration: Bespoke reporting systems, reassessment triggers, and alternative communication channels ensure vulnerable clients receive information and support on their terms. This technological approach not only improves outcomes but demonstrates innovation to potential clients and referral partners.

Cultural Transformation Through Training: Empowering teams with skills to identify and support vulnerability means embedding fairness into your firm’s DNA. This cultural shift becomes a powerful differentiator when building your professional brand and reputation in the market.

Communication Excellence: The FCA actively encourages user testing of reports and documents to ensure materials are written in plain English and understandable by all clients. This commitment to clarity benefits all clients whilst demonstrating your firm’s attention to detail and care.

Purpose-Driven Data Collection: Rather than collecting vulnerability data merely to appear compliant, leading firms use this information strategically to improve outcomes, evaluate effectiveness, and strengthen client relationships. This data-driven approach supports both regulatory requirements and business development.

Building a Spectrum-Based Assessment Framework

Traditional binary approaches to vulnerability assessment significantly underestimate the true scope of client needs. Research demonstrates that when firms switch from a binary approach to a spectrum-based assessment, they can distinguish between clients who have no characteristics, those who have characteristics but aren’t affected, those affected slightly, and those significantly impacted.

This nuanced approach reveals that approximately 1% of clients experience addiction-related vulnerabilities, 3.2% have hearing or visual impairments, 10.5% live with physical disabilities, and 8.2% experience mental health challenges at moderate levels of vulnerability. Without spectrum-based assessment, these clients would likely be misclassified as “not vulnerable.”

Five Strategic Steps for Market-Leading Firms

1. Intelligent Identification Systems

Moving beyond basic fact-finding to incorporate both objective measures (such as missing bill payments in three or more of the last six months) and subjective factors (like confidence levels and emotional regulation capabilities) creates a comprehensive understanding of client circumstances.

2. Dynamic Assessment Processes

Vulnerability characteristics change over time, requiring systematic client journey mapping and regular reassessment. Setting review dates and checking in with clients demonstrates ongoing care whilst ensuring your support remains relevant and effective.

3. Individualised Support Strategies

Each vulnerable client requires support tailored to their specific needs and circumstances. Rather than making assumptions about required support, successful firms discuss client needs and expectations directly, creating bespoke solutions that demonstrate genuine care and attention.

4. Continuous Monitoring and Improvement

The FCA emphasises evaluating support effectiveness. For example, if a client receives regular phone calls due to market uncertainty concerns, firms must gather feedback on the usefulness of this support. Without measurement, well-intentioned support may not deliver the intended outcomes.

5. Design-Led Service Development

Vulnerability characteristics should influence how firms develop communications, products, and services from the ground up. This includes user testing materials and information to ensure accessibility, incorporating both moderated and unmoderated testing approaches to gather valuable insights before launch.

Leveraging Technology for Competitive Advantage

Modern technology offers significant opportunities for firms supporting vulnerable clients. Systems provide flexibility to create bespoke reports including details about available support from relevant services and professionals. This technological capability supports both client-facing communications and internal audit requirements.

Technology also enables firms to design different report formats for various purposes—client-facing reports that keep clients updated on their questionnaire responses and support being provided, alongside internal reports for sharing relevant information and analysis with colleagues to monitor vulnerability characteristics effectively.

The Professional Network Opportunity

In the competitive UK financial services market, demonstrating a proactive and ethical approach to supporting vulnerable clients creates powerful differentiation. Solicitors, accountants, and other professional partners increasingly prefer referring clients to advisers who demonstrate emotional intelligence, robust processes, and genuine commitment to fair outcomes.

This creates significant opportunities for professional networking strategies and referral generation. When professional contacts understand your firm’s comprehensive approach to vulnerable client support, they gain confidence in recommending your services to their own clients who may be experiencing challenging circumstances.

Communication and Training Excellence

Successful implementation requires comprehensive client communication training for all team members. Staff must develop skills to recognise the four vulnerability drivers and incorporate vulnerability considerations into every client interaction.

The FCA’s guidance encourages firms to enable customers in vulnerable circumstances to disclose their needs comfortably, requiring systems and processes designed specifically for this purpose. Online communication tools often work particularly well, allowing clients to disclose information at their own pace without requiring phone or face-to-face communication.

Building Trust Through Transparency

Firms must make clients aware of available support without necessarily informing them about specific vulnerability assessments. This transparency builds trust whilst ensuring clients understand how your firm can help them navigate challenging circumstances.

Collecting vulnerability data requires clear rationale and client understanding of why information is being gathered. This data becomes powerful when used appropriately at an individual level rather than for generalised client categorisation.

Measuring Success and Demonstrating Value

Leading firms regularly evaluate their support effectiveness using client feedback systems to gather insights on the usefulness of provided assistance. This measurement approach ensures support delivers genuine value rather than simply appearing appropriate from the firm’s perspective.

Recent research shows that firms implementing comprehensive vulnerability support have seen improvements in client resilience and capabilities over recent challenging periods, providing reassurance and guidance that helps clients become more confident and knowledgeable.

The Strategic Marketing Advantage

For financial planners seeking sustainable growth, building a reputation as a firm that supports every client—especially during vulnerable periods—creates substantial business advantages:

• Enhanced referral opportunities from professional networks who trust your approach
• Stronger client retention through demonstrated care and support
• Positive market differentiation in an increasingly competitive landscape
• Improved regulatory relationships through proactive compliance excellence
• Team satisfaction and pride in meaningful, ethical work

Supporting vulnerable clients effectively transforms regulatory requirement into competitive advantage, creating the foundation for sustainable business growth whilst delivering genuine value to those who need it most.

Conclusion: From Compliance to Competitive Edge

The FCA’s emphasis on vulnerable client support presents forward-thinking advisory firms with a unique opportunity to demonstrate their values whilst building competitive advantage. Firms that embrace this challenge with genuine commitment, robust processes, and strategic thinking will find themselves not only meeting regulatory expectations but creating sustainable differentiation in an increasingly crowded marketplace.

The question isn’t whether your firm can afford to invest in comprehensive vulnerable client support—it’s whether you can afford not to seize this strategic opportunity for growth, differentiation, and meaningful impact.

For more insights on building competitive advantage in financial advice, explore our comprehensive range of marketing services for financial advisers designed to help you grow your practice whilst delivering exceptional client outcomes.