One of the most valuable roles that advisers play is being a financial coach to their clients.

Managing long-term savings and investments for good outcomes can be complex. It’s one reason why consumers turn to advisers to help them make sensible decisions.

As advisers know however, clients have different needs at different life stages. An additional challenge is that clients may unexpectedly fall into a vulnerable situation which requires an extra level of support.

As the global pandemic demonstrated, people can find themselves in vulnerable circumstances at any time. It’s worth a reminder of the four key drivers behind consumer vulnerability that the FCA highlights: health, life events, resilience and capability.

For each of these four drivers, advisers need to have a planned approach in place to be able to offer that extra level of support to clients.

Perhaps one of the most challenging areas for advisers to provide for is capability, which the regulator defines as ‘low knowledge of financial matters’ or ‘low confidence in managing money’.

This vulnerability needs specific support to not only avoid the risk of foreseeable harms, but to avoid clients mismanaging their long-term life savings too.

Protecting vulnerable clients from poor decision-making

Providing support for client vulnerabilities is a consistent theme in almost all communications from the FCA.

It was covered in the regulator’s retirement income advice review findings published after this year, and a Dear CEO letter dated October 7 which highlighted the need for firms to review the FCA’s report if they haven’t already.

The findings made clear that while there was evidence that adviser firms have considered the needs of vulnerable customers, many were not implementing vulnerable customer processes in an ‘effective or consistent manner’, risking poor outcomes.

Income withdrawal strategies was a priority area called out in the report. As I’ve commented before, this isn’t a surprise as clients running out of money is a core risk in retirement income advice. And for those clients with low financial capability, poor understanding of the consequences of overspending, without suitable controls, increases this risk and could undermine the financial plan put in place to protect them.

One relatively new factor has exposed some clients to an added risk here. Over the past couple of years as interest rates rose, it’s been well documented that a number of clients chose to place part of their long-term savings with banks, off platform. However, the accessibility of the money, and the risk clients spend it without their adviser being aware, potentially undermines advice.

Before the move to off platform cash, advisers had the ability to protect clients from themselves as clients would typically flag access to their savings. The process allowed the adviser to fulfil their client responsibilities, call out any risks and adjust financial plans if necessary.

Moving cash back on to a platform helps to provide an extra layer of support for clients by ensuring any large withdrawals are fully considered so future income can be suitably managed.

abrdn Wrap’s cash solutions gives advisers more control

The addition of cash solutions to abrdn Wrap’s Personal Portfolio means advisers can now actively manage all their clients’ assets, including cash savings, in one place.

abrdn Wrap’s cash solutions not only supports firms’ advice service proposition with its superior level of integration, it puts advisers in control of clients’ assets which is essential if clients display potential vulnerabilities.

By bringing client cash onto the platform, advisers can also take fast action where and when they need to, to help ensure good client outcomes. Moving money from other investments, such as mutual funds, to cash deposits is easy, using Wrap’s trading functionality.

One of the many advantages of abrdn Wrap’s cash solutions is that cash placed in deposit accounts is seamlessly included in existing plans and processes and is available to view on the client portal.

Other benefits include:

Advisers will continue to play a valuable role as financial coach to their clients. Now, with abrdn Wrap’s cash solutions, advisers can benefit from support that helps to broaden out their centralised investment proposition and refine their processes.

And for clients, especially those with vulnerabilities, abrdn Wrap’s cash solutions means they can benefit from the knowledge and reassurance that all their assets are being professionally looked after for the long term.

Visit Cash Solutions on Wrap or speak to one of our team

Take a look at the other articles by Alastair Black in the series

The value of investments can go down as well as up and your clients could get back less than they paid in.

The views expressed in this blog should not be regarded as financial advice.