As we all know there is, quite rightly, a huge focus on vulnerable customers at present, with advisers at the forefront in terms of the ways and means by which they recognise vulnerability, and what this means in terms of the way they go about working with these clients, how they document those interactions and client understanding, and the outcomes they secure for them.
There are, of course, different shades of vulnerability and not all are permanent so it’s a sensitive area that advisers need to handle in the right way. It could be a mental health issue, or it could be a more physical or medical vulnerability, and we should not forget that many clients – particularly in the later life space – are not always forthcoming in terms of providing information to allow advisers to delve a little deeper into what they may be dealing with.
At a recent ‘Breakfast with Stuart’ meeting we talked specifically about how advisers might get to grips with clients’ medical issues, especially when it comes to later life lending.
This is an interesting conundrum because traditionally financial services customers when they, for example, are asked about their medical history or their current physical shape, are likely to answer with, “I’m fine”, because they are potentially fearful of what perceived poor health might mean for their ability to secure a product, or their premium levels, etc.
The reality is, that with equity release specifically, providing full medical information may actually result in the client being offered a larger loan amount at higher LTVs, or with some providers these days, access to better rates at lower LTVs.
Of course, from a medical point of view, it’s clearly not a positive to have very high blood pressure, or any type of medical condition that might be deemed to curtail their life expectancy, but the reality in our market is if advisers know this information, they might be able to secure them a better deal.
Years ago, securing the medical information tended to present these options only if the client was looking for a maximum equity release advance, but that focus has shifted and, as mentioned, there are providers who – on knowing this – will offer cheaper pricing for those who don’t want a maximum release.
But, as we know, clients may still be suspicious even when this is explained to them, and part of the ‘soft skill’ set of the later life adviser will be to ask the question, or find another way of securing that information without putting the customer’s nose out of joint.
One way to do this is to ask if the client is on any medication, as from this you’ll be able to determine what the ailment might be, and whether it might be of a serious nature to shift the lender/product choice elsewhere.
No-one is expecting the adviser to be a medical expert, but by asking the right questions, you should be able to go beyond the “I’m fine” response and determine whether that’s actually the truth.
When the FCA last looked into the equity release advice sector, one of its criticisms was around advisers not always asking these types of medical-focused questions, and there being the potential to miss an underlying physical or mental vulnerability as a result. Therefore, as a minimum, advisers should not be fearful of taking a client in this direction and, if they still are unwilling to share any of that information, then being sure to document that fully in order to satisfy both themselves and the regulator.
In a way, as mentioned, having this information could present a more positive outcome for the client, but years of poor health automatically meaning a more negative result could mean the customer is reticent to go there.
Hopefully, with reassurance and a full detailing of what it could mean, advisers will be able to determine the truth and, as a result, make their lives much more comfortable.
Stuart Wilson is CEO at Air Group