Vulnerability – A challenge for us all.

Do you think you are Vulnerable Client? Probably not if you’re a young fit and healthy individual who makes astute business decisions every day of the week or someone who is responsible for others.

But wait a minute. Identifying where a client may exhibit vulnerability is a challenge, and one that the regulator has become more and more concerned about in the last few years.

There is a stereotype that clients are vulnerable through a reason of age, illness or infirmity, or due to a recent traumatic event. What about someone who is young, inexperienced, and may have no knowledge of financial matters.

And what about other not so obvious circumstances. For example, what about those seeking advice to transfer from a defined benefit pension. Would they be considered as being vulnerable?

In 2015, the FCA published an excellent insight into consumer vulnerability which focused on reasons for an individual’s vulnerability and identified good practice in dealing with these clients.

What about someone who is selling their business. These individuals – or families – are typically financially astute, used to taking risks, invariably they have made significant and impactful decisions. Should these individuals should be treated as vulnerable.

Selling a business, for most people, is something they will have little experience in, be of significant impact, and often be tied up with emotion. They need time to think, low pressure, and understanding that inaction can be less damaging than an action that is later regretted

Take Attitude to Investment Risk. The way people respond to information can differ from person to person and most advisers will, when explaining investment risk to their client, use numbers, graphics, verbal explanations as well as written descriptions. Is the same true for other areas of financial advice?

Some will respond best to meetings, but there are those who may not be able to provide their full attention for the period we, as advisers, often command. Some may favour an office meeting where they are free from distractions, others the comfort of their own home. Not everyone may share our command of technology.

Vulnerability changes with time – over the longer term individuals can become more or less able to deal with their financial affairs.

Some advisers have advocated an approach where all clients are treated as vulnerable. After all, giving clients more time to think and having trusted individuals in meetings are things that must be in those individuals’ best interests. But on the other hand, others may find this approach patronising.

And maybe what we are saying here is that, surprise, surprise, everyone is different and that we as advisers have to be acutely aware of this.

Of course, we also have to be aware that we as advisers can be vulnerable as well!

Pension Freedoms – Good or Bad?

HM Revenue & Customs’ most recent figures show a total of £21.7bn has been cashed in from pension pots since the freedoms were introduced in April 2015.

There has been a steady increase in the funds being withdrawn year on year with almost five million withdrawals having now been made using the pension freedoms.

There was a slight drop-off in the value of payments made in the past three months but this still amounted to just under £2bn accessed via 585,000 withdrawals – the highest number since records began.

So people are clearly making the most of the freedom and choice regime. But is such unrestricted access to pension funds a good thing? Some commentators say yes, for more than one reason.

Right decision

Firstly, pensions as a concept in this modern world of constant change need trust. Trust in the pensions system has been eroded over the years, rightly or wrongly. You gain trust by trusting others, in this case trusting people with their own money. The government took a bold step giving back control of pension funds to those who have saved their hard-earned money into them when it brought in the freedoms. We are still only a few years in but, while there have been some teething problems and some large sums of money have been withdrawn, it has so far not been the free-for-all that some predicted.

Secondly, the restrictions we faced before the freedoms were causing more issues for those who have built up multiple small pots throughout their careers.

Thirdly, being able to dip into the funds when it suits or getting access to larger sums early on in retirement has helped many who would have been stuck paying off debts while receiving just a small pension annually. The interest saving for a lot of people must have been significant.


On the flipside of all this, though, the ability to access large sums of money in a single transaction has provided an additional, lucrative target for scammers.

When income was limited, and the norm was regular income for life, and scammers could not access pension funds. Now they can target individuals, coercing them to cash in their funds with the promise of better returns or more exciting investments, only to run off with them (and after they have been taxed as well).

As clients have the right to access these funds, providers may be unaware of what they intend to do with them.

But apart from education and warning, there is little else that providers can do.

There is no doubt about it, pension freedoms need to be embraced. And the government, providers and advisers need to do what they can to educate and protect the public from making mistakes.

Right now, this appears to be working, but only time will tell.

If you would like to find out a bit more, give us a call on 0141-956 5525, or drop us an email to [email protected]

Life Assurance

Sunset, Paragliding, Sky, Parachute

Life Insurance is like a parachute, if you don’t have it the first time you need it, there will likely be no second chance!!!

The importance of Life Insurance is often not realised by many until it’s too late. If you can relate to this and would like more information, you should be speaking to ABFM.

Email [email protected] or call 01419565525 to speak with us and we will be more than happy to have a chat.

[email protected]

Thoughts on Investing Ethically.

The term ‘ethical’ is often used as a catch-all to describe funds managed with social, environmental, or other responsible criteria in mind.

Investing ethically offers the possibility of taking advantage of good performance whilst also benefiting society. And it’s becoming more and more popular with investors of all ages.

But of course, ethics are personal. An industry that seems abhorrent to one person might seem like a necessary evil to others. Take pharmaceuticals. Some investors would avoid the industry because of moral objections to animal testing. Others suggest the work of pharmaceutical companies contributes to the development of society.

That’s why you’ll need to make sure your investment is consistent with your moral views before you invest. When giving advice we look at the approaches taken by a selection of funds whilst taking into account how much risk you want to take just as you would with any other type of investment.

Striking a balance between investing morally and delivering strong performance is no easy task.

We are also strong advocates of diversified investment, and it seems to us this should also apply to Ethical Investing. The principle of diversification is well documented elsewhere is these posts and should be fundamental in portfolio choice in our opinion.

As with any investment, make sure it fits your objectives and you are comfortable with the risks before investing. And if you are unsure, seek advice.  Give us a call. We will be pleased to assist.

How Things Change

This picture takes me back a few years. Most of you will recognise what it is although maybe some of our younger readers may struggle.

To times when youngsters of my age (then not now!), collected records by the barrowload and played them at the highest volume possible much to the great annoyance of parents who generally thought the music was atrocious and the state of the bands scruffy.

Now all my music collection is on my iPhone and can be added to or deleted at will.

30 years age when I went into financial services, the Footsie 100 Share index was around 1700. Today, its around 7000. If you had invested, say £1,000 30 years ago, today your £1,000 would be worth around £4,000.

What will it perhaps be in 2050?

If you’d like a chat about investing and what might be suitable for you, give us a call. We’d love to hear from you.

ps Just in case you don’t know, its a record turntable for use in the days before CDs and Tapes! But you knew that, didn’t you?

Ageing – A Problem Facing Us All

What’s the solution to the ageing dilemma? As we grow older and live longer as a nation it puts strain on the state and on our own resources. According to the 2017 book The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton and Andrew Scott half the babies born in wealthier countries since 2000 will see their 100th birthday – 103 in the UK – changing everything from work and economics to our relationships. While living longer, potentially to 100 years and more, is to be welcomed, no-one would want to live it in poor health and relative poverty. 

What life span have the children got to look forward to?

The challenges of long-term care are well documented. State pension ages for men and women have been increasing and governments have launched new initiatives such as pensions freedoms and auto enrolment in recent years in order to boost individual retirement savings, which for most people are inadequate. As the 100-year life states, what this means for individuals is: “If we live for longer we need to invest more in our financial assets to support a longer life. However, a longer life is not just about getting the finances right but also about making sure you invest in your health, your families and friends and your own productive abilities. A longer life will lead us to reassess how we balance these financial and non- financial forces over our lives.”* 

A recent survey shows that women’s retirement savings are set to fall short by 16 years, while men are on average likely to come up 10 years short. So, although the average woman in the UK wants to retire at 63, if they did so their savings at retirement would run out by the time they were 69, assuming they are spending £27k per year. The survey based this on an average life expectancy of 85 and average savings of £392 per month. It says that in order for Brits to fund their living expenses to age 85, they either need to drastically increase the amount they save or continue working for significantly longer. 

I believe Advisers such as ourselves, are in a unique position to add value and expertise to clients’ wellbeing by helping them do this by building the products and tools that enable them to meet the wealth and health challenges of the future.