Understanding vulnerability

21 September 2023

At a glance

Any one of us can find ourselves vulnerable, at any point. Since Covid, and the cost of living crisis, the number of vulnerable people in our society has soared. In May 2022, the FCA reported that 47% of the population showed characteristics of vulnerability – struggling with daily life and everyday decisions1. And 1 in 6 people in the UK have no savings at all2.

What does vulnerability mean?

We all have nights when we lie awake worrying about money or how to make ends meet. But vulnerability goes much deeper. And it can have devastating effects, both on our financial wellbeing, and our mental or physical health. To help us understand what vulnerability means, the Financial Conduct Authority (FCA), the UK finance-industry regulator, has created some clear definitions. Vulnerability should be considered as a “spectrum of risk”, its guidance states, and “all customers are at risk of becoming vulnerable”3.

People in vulnerable circumstances can find it almost impossible to make decisions or see straight. For example, the ‘brain fog’ that can be associated with long Covid, or the menopause, can literally cloud our judgement. It’s easy to make choices you regret, later on.

What creates vulnerable circumstances?

According to the FCA, there are four key ‘drivers’ of vulnerability4 that can damage our financial, emotional or physical resilience:

•    Our health. A sudden medical emergency, or a long-term health condition can increase our vulnerability and impact our personal finances.
•    A major life event such as losing a loved one, or a relationship breakdown.
•    A life change that impacts our financial or emotional resilience, such as redundancy, or the end of a business, or a relationship.
•    Reduced capability – low knowledge or understanding of financial matters, or low self confidence in managing money.

The financial advice industry is increasingly aware that the number of drivers that can make a person vulnerable has increased. Any one of these risks can trigger vulnerability. But if several occur simultaneously, it can hit like a tidal wave.

Now you see vulnerability, now you don’t

Most of us would recognise that becoming older or more infirm, or losing someone we love, can make us vulnerable. Or coping with a long-term disability or illness. Yet vulnerability can be all but invisible to the people around us. 1 in 4 of us will face a mental health issue each year5, but not everyone will feel able to talk about it. A relationship breakdown, a job loss or bankruptcy, or issues caused by the menopause often stay hidden, and people suffer in silence, too ashamed or embarrassed to bring it up.

We can also divide vulnerable situations into permanent ones, such as a physical disability or a life-limiting illness, and those that are – hopefully – temporary, such as a lack of financial or emotional resilience after a divorce. Edward Grant, Director – Technical Connections at SJP, reminds us that anyone can find themselves vulnerable: “It’s a common misconception that if a person is wealthy, or has a good pension in place, they can’t be vulnerable. We need to debunk this myth. Someone who has just won the National Lottery can be every bit as vulnerable as someone on a low income.”

Looking out for signs of financial vulnerability

If your circumstances change, making any decision can seem incredibly hard. It’s very common for life events such as bereavement or a breakup to come as a shock. People can’t always think clearly about their finances. They end up not making the same kind of financial decisions that they would have done previously.

Finding support in vulnerable circumstances

It can be hard to talk about the circumstances surrounding vulnerability. But you don’t have to take decisions alone.

Financial advisers can help you to plan adequately if your long-term future has suddenly changed. They can apply their expertise and knowledge to guide you in the right direction, while also helping to keep you safe from fraudsters or scammers.

How we can help

We can help spot vulnerability and will adapt the way they support and advise to make you feel safe and in good hands.

We may suggest that you have someone you trust with you at meetings, to help remember things you may forget. And we will always communicate with you as clearly as possible in whichever way you prefer – whether that’s face-to-face, or virtually, or sending documents in large print or braille. They’ll take as much time as you need to explain complex matters and move at a pace that feels comfortable.

We can also offer help that goes beyond purely financial advice – such as referring you to a specialist to set up a power of attorney, so a trusted person can make financial decisions on your behalf. Or we can help you find additional professional support through our relationships with Mind and Care Sourcer.

How can you create positive financial wellbeing?

Many people are reluctant to tell their financial adviser that they have a problem that could make them vulnerable, especially if they’re blaming themselves for their financial situation. But talking about debt, or money issues, is a positive step towards restoring your financial wellbeing: A financial adviser can be a shoulder to cry on – and then can look at the facts without emotion to help you take a degree of control over the situation. It can take the emotion out of the situation.

It’s always helpful to share personal information with your financial adviser. The more they understand your circumstances, the better they can support you and get you back on track. You can start to feel confident that the money side is being taken care of by experts. So you can concentrate on your own emotional and mental wellbeing.

Doing the right thing in vulnerable circumstances

This principle of doing the right thing is now being enforced by law. The FCA’s new Consumer Duty regulations require financial services firms to be proactive in ensuring good outcomes for all their clients, regardless of their circumstances. In vulnerable circumstances or difficult times, the value of financial advice can go far beyond money.6

The reassurance of knowing that somebody has got your back, and can help find a workable solution, will help you move on, and plan your future.

Get in touch today to find out how we can help you if your circumstances are changing.

Advice relating to a power of attorney and Care Sourcer necessitates the referral to a service that is separate and distinct from those offered by St. James’s Place Powers of Attorney are not regulated by the Financial Conduct Authority.


1Financial Conduct Authority – 26 July 2023 (Based on a survey sample size of 19,145)
2Money & Pensions Service – 7 November 2022
3Financial Conduct Authority – Guidance for firms on the fair treatment of vulnerable customers – Accessed September 2023
4Financial Conduct Authority – Accessed September 2023
5Mind – Accessed September 2023
6FCA, Guidance for firms on fair treatment of customers’, February 2021

SJP Approved 06/09/2023

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