According to a new report from more2life, advisers in the later life lending market are identifying twice as many vulnerable clients as they did two years ago.
The study suggests that economic conditions and increasing living costs are causing more customers to face financial challenges, even as the criteria for vulnerability remain consistent.
More2life’s bi-annual vulnerability report indicates that 30% of advisers have seen clients they consider vulnerable in the last 12 months. This represents a significant increase from the 15% reported in 2021.
This upswing seems to result from fewer advisers noting that their clients show no signs of vulnerability, a figure that has declined from 20% in 2021 to 12% in 2023. There’s also been a surge in advisers believing that 80% of their clients face vulnerability issues, rising from 10% in 2021 to 17% in 2023.
The report acknowledges the impact of recent economic challenges on client vulnerability but also highlights the efforts of advisers to better understand the factors that create a vulnerable customer, especially with looming changes in Consumer Duty regulation.
Given the current climate of rising inflation, it’s unsurprising that almost one in three advisers (31%) identify clients financially affected by the cost-of-living crisis as the most common type of vulnerability. More2life’s research further reveals that 24% of advisers find their clients more financially stressed than before, and 23% note their clients have clearer needs and fewer aspirations.
Furthermore, the strain on retirement incomes has become evident, with 15% of advisers reporting that clients are more likely to need income boosts, and 16% saying their clients are more open to discussing options like equity release.
However, the key reasons for customer vulnerability, as identified by advisers, have remained consistent despite the pandemic. A significant 43% of customers seek support for financial challenges not related to the cost-of-living crisis, such as dealing with interest-only mortgages. Other common vulnerabilities include clients being of an advanced age (42%).
Ben Waugh, managing director of more2life, said: “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 as worries around the need to repay interest-only mortgages, advanced age and dealing with a life-changing event have remained consistent.”
He added: “more2life is committed to working closely with the advisers it supports to help customers find the right outcomes for their individual situations. We are keen to work closely with partners.”
