Half of the UK population are now classified as ‘vulnerable’ – but can all wealth managers and IFAs truly say they handle their at-risk clients with the proper care? The evidence suggests that many are not. Some wealth managers even suggest less than 1% of their client base is vulnerable – a number so low as to be highly improbable.
What is more likely is that many vulnerable customers go undetected, with potentially serious consequences in terms of client outcomes and possibly even regulatory action for financial firms. So why is the level of vulnerability in the UK rising, and – crucially – how should wealth managers and IFAs respond?
As a consulting and customer solutions company Huntswood has been very much focused on the issue. Our recent white paper, Vulnerability in 2025, found more than half of financial services clients in the UK are now vulnerable – a rise of 7% in one year. After surveying 2,500 consumers, we found 44% of customers were classed as vulnerable in 2023 – across a range of sectors including financial services – which has risen to 51% now.
There are several reasons for this rise, with the largest contributor a near-doubling in cases of individuals with mental health conditions, which rose from 10.2% in 2023 to 19.5% in 2024. Possibly of slightly less relevance for the clients of wealth managers and IFAs, one-sixth (16.7%) said they felt financially stressed in 2024 – an increase from 14.1% in 2023. Our study also found a rise in the number of customers experiencing financial distress due to addiction, which has increased from 0.8% in 2023 to 3.5% now.
For more on this subject, read The changing nature of client vulnerability
And, in total, 52% of vulnerable customers have one circumstance that classifies them as vulnerable while 24% are experiencing two and 14% three. One in 10 are experiencing four or more issues that classify them as vulnerable. A complicating factor here is that many of these individuals are not aware they are vulnerable.
They may report having factors that make them at risk – but are not necessarily aware of that or that they may require extra assistance. Our survey found 53% of individuals are unaware they may be classified as vulnerable – albeit this has fallen from 67% in 2023.
Of course, part of the reason for the rise in vulnerability is thanks to financial services firms themselves proactively asking customers the right questions about their needs. Nevertheless, too many wealth managers and IFAs rely on individuals self-reporting their vulnerability.
This is not a sensible strategy, as so many clients are unaware they may need extra, or tailored, assistance. We have seen numerous cases of firms poorly linking up their teams and information, meaning customers must say they are vulnerable multiple times in order to obtain proper help.
Why vulnerability matters
All of this matters for two reasons. First, giving vulnerable clients the appropriate level of care is simply the right thing to do. Second, and on a related note, doing so will keep the regulator happy.
The stance of the Financial Conduct Authority (FCA) is that financial firms must properly take vulnerability into account when dealing with clients. The regulator is also clear that it expects firms to continue driving improvements in practice and outcomes.
The FCA’s definition of vulnerability is “a customer who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”.
“The regulator has stated that financial firms should see vulnerability as a spectrum, with four main causes – health, life events, resilience and capability.
Vulnerable clients do not just need someone to manage their money – they need care, clarity and compassion.”
The regulator has made it clear that all customers can become vulnerable. It has also stated that financial firms should see vulnerability as a spectrum, with four main causes – health, life events, resilience and capability.
The right workflows and technology, used well, can be a major boon for firms looking to detect their at-risk customers and improve how they treat them. Our report found fewer than one-third (29%) of vulnerable customers said organisations they had dealings with knew they were vulnerable, while two-fifths (42%) said their firm was not aware of their need for extra support. A further 29% said they did not know if a company was aware or not of their situation.
Our findings suggest wealth managers risk offering overly complex products that vulnerable customers, such as the elderly and financially, may struggle to understand. Additionally, older clients may make unsuitable decisions due to impaired judgment.
Mitigating strategies
We propose several strategies to help wealth managers mitigate the risk of failing to support vulnerable customers, including setting up a framework and education programme to train employees on vulnerability. Another suggestion is to simplify communication, using plain language and visual aids to explain risks. Use different ways to communicate – especially with more complex products.
Enhanced suitability checks should be carried out, as well as regular reviews of client circumstances, risk tolerance and product suitability. It is also our recommendation that wealth managers and IFAs bring in ethical training to help staff prioritise client interests and recognise vulnerability signs.
Vulnerable clients do not just need someone to manage their money – they need care, clarity and compassion. Until that becomes the norm, we must keep asking ourselves the hard question: are wealth managers and other advisers truly protecting the people who need them most?
Martin Dodd is chief executive of Huntswood, a UK-based consulting and customer solutions company owned by ResultsCX
