Expert: Peter Neufeld, Partner - Head of Digital Customer Experience, EMEIA, EY joined by Lynn Fay from the FCA Facilitator: Rupert Neville, Independent Consultant
Headlines:
- The industry tends to view vulnerability narrowly, as a fixed trait, whereas in reality, many clients experience temporary states of vulnerability due to life events.
- Advisers should identify and protect vulnerable clients while avoiding simplistic segmentation.
- Specialist support at key moments like bereavement is valued.
- This all links into Consumer Duty and the “duty of care acting in the clients best interest.”
Discussion:
The session covered several key topics around wealth management for aging and vulnerable clients. A key theme was the need for wealth managers to build deeper relationships not just with clients but their whole family, including spouses and adult children, to prepare for the intergenerational wealth transfer and potential vulnerabilities like dementia later in life.
The group discussed how factors like increasing longevity and gender imbalances (women living longer than men on average) are creating new challenges in this area. Advisers need better training on having difficult conversations and involving the whole family in financial planning. This could involve tools like cashflow modelling to facilitate discussions.
Technology is also important to help families make decisions, especially when members may be scattered. However, personal relationships remain crucial – consumers want both digital access and face-to-face conversations.
The advice gap means that we probably have the right level of engagement with our UHNW clients but not necessarily with our affluent clients.
Firms should also communicate their value clearly to inheritors who may question fees. Younger inheritors are often less willing to pay for advice compared to older generations. But life events like having children often increase openness to advice.
Overall, the industry needs to focus more on customers’ lifetime needs, not just immediate sales goals. It is important to have robust conversations with clients and this includes discussions about having the likes of Lasting Powers of Attorney in place and up to date wills. Serving the next generation better may require new thinking as their expectations and behaviours evolve.
It was felt this topic was too broad and we did not have time to focus on any one topic, like divorce, in detail.
Key takeaways:
- Train advisers on having family-based conversations using tools like cashflow models
- Develop specialist support for bereavement, dementia, and other key moments
- Use data responsibly to flag vulnerable clients while avoiding simplistic segmentation
- Communicate value of advice through channels younger inheritors use
- Rethink customer journeys for retirement, including health planning
- Focus on next generation needs and expectations
As an industry we should do more of the following:
- Prepare for intergenerational wealth transfer - Advisers need to build relationships with spouses and adult children early on to prepare for wealth transfer later. This avoids assets leaving when clients pass away or develop vulnerabilities
- Recognise changing demographics - Longer lifespans and women outliving men are creating new planning needs around healthcare and caregiving in later life
- Rethink attitudes to vulnerability - View vulnerability as situational, not a fixed trait. Use data responsibly to identify and protect vulnerable clients
- Communicate value clearly to inheritors - Explain value clearly to inheritors who may be less willing to pay fees than older clients
- Importance of team dynamics - The lack of diversity within an organisation, means teams cannot adapt to change of ownership in wealth. It is why women who inherit are likely in the first year to move the wealth to another provider or cash in
