One in three investors may fall into the Financial Conduct Authority’s definition of vulnerable, according to new research.
Assessing and managing client vulnerability is a key role for Financial Planners under the regulator’s new Consumer Duty.
Over one in three (34%) of 1,414 investors surveyed by consumer personal finance website Boring Money reported at least one aspect of vulnerability under the regulator’s criteria.
The regulator classifies vulnerability as clients who need special consideration due to health, life events, financial resilience, or capability (knowledge and confidence).
A quarter (27%) of investors surveyed said their confidence about investing was two or less out of ten.
One in five of the investors surveyed classified themselves as vulnerable.
The investors who were vulnerable, as defined by the regulator’s criteria, were more likely to be young and/or female, said the report.
Vulnerable investors were also likely to be less wealthy. The median asset value for vulnerable investors was £38,000 compared to over £100,000 for non-vulnerable investors.
Holly Mackay, CEO at Boring Money, said: “Vulnerable is a powerful word and it’s easy to think of this as a small minority of investors, particularly as we know that investors are typically the most affluent segment of society.
“However, if we think about the full range of criteria, from physical and mental health, to impactful life events such as divorce or bereavement, as well as the double whammy of low financial resilience and confidence, it’s striking to see that one-third of all investors today self-classify as vulnerable by the regulator’s standards.
“With financial resilience set to come under pretty heavy fire from this Autumn, this percentage seems only likely to increase and it’s a real call to action for firms to truly understand their customer base, when creating and marketing investment products and services.”
• Boring Money surveyed 4,500 UK adults on 20 and 21 July, 1,414 of whom were investors.
