In the later life lending space we’ve always talked a lot about the need for high-quality ‘soft skills’ from advisers given the nature of the clients we are likely to be dealing with, and what this might mean in terms not just of communication and helping understanding, but also identifying areas which might not feel right in the grand scheme of things.
That ‘soft skill’ focus has historically tended to look at the age demographic of the later life borrower, and as a result of that, identify clients as being more likely to be vulnerable, more likely to be coerced, more likely not to understand what they are signing up for and the responsibilities that come with such products.
That is all right and proper, but what has been interesting to see, is how this client focus and identification has shifted out, from not just within later life advice, but now – via the Consumer Duty specifically – to all other sectors, again specifically when it comes to potential vulnerability but also in terms of consumer understanding and product/service responsibilities.
You might argue that what has been demanded of later life advisers for many years should actually have been the case right across the board, especially given that age does not necessarily determine a greater chance of any of those points identified above being present.
Indeed, in my experience, some of the very sharpest customers I’ve ever seen have been older ones, who know exactly what they want, are fully researched on the topic(s), who are clear on what they are signing up to, etc. And, conversely, it is some of the younger consumers who come to a product, such as a mortgage for example, not being clear at all on what they are doing.
I suppose that’s why we have good advisers in these spaces but it’s also important to recognise that ‘soft skill’ ability and knowledge and training and understanding is not just a ‘one and done’ situation for later life advisers.
As society shifts, as the economy changes, as people’s mental well-being develops, as we increasingly have a situation where individuals are being expected to be much more responsible for themselves – particularly as they move into retirement, it is obvious this will present itself within individual clients in different ways.
And this will mean clients present today and in the future in a very different way to how they might have presented years ago. This is key in terms of identifying personal vulnerability of course, but it is also true in terms of recognising financial vulnerability as well, and the important point here is that this is also not a ‘one and done’ situation.
Clients who seemingly present with no hint of vulnerability at the first meeting or communication, might well do so in subsequent interactions and each one needs to be taken and assessed on its merits at the time, and the advice and adviser needs to adapt to that and let it shape their advice.
We see this a fair bit in the later life space, with a client seemingly clear about what they want, what they need the money for, etc, at an early stage, but a deep-dive into their financials, their situation, etc reveals a gap in terms of why they are even looking to release equity from a property, or take out a RIO, or a mainstream mortgage.
Advisers ears will prick up at this point. Are they vulnerable? Are they being coerced by a family member to go down this route? What about others that are close to the client? What do they really intend to do with the money?
I’ve seen a case recently whereby it was a carer coercing the client; basically, convincing the person they’re caring for they are their best friend, and the individual should dip into their equity in order to help fund the carer’s house deposit.
Now, that is information which will require a bit of digging on the adviser’s part, but it will be obvious to all that when there is a disconnect between what the client says they need the money for and the financial picture they have, then it does need looking at and a following of the trail, so to speak.
Within our Air Academy we have a specific module on vulnerability that I would urge all advisers to work through. It contains a huge amount of collateral support material provided by the Equity Release Council, lenders, and other stakeholders, and it will provide plenty of insight into the best way to move through this process, how to identify vulnerability, and what to do when you have reached that assessment point.
I’m of the opinion that all advisers need to working through such modules, but certainly within later life advice it is an absolute necessity, and it actually builds on the ‘soft skills’ that are already there for most, but it does so in a very structured way and helps all concerned to work through a process, to identify what is happening and to ensure the outcomes are positive for all.
Stuart Wilson is chairman at Air Club