Financial Planners are underestimating the number of clients that could qualify as vulnerable under Financial Conduct Authority guidelines, according to a new report.

Only half of advisers have carried out work to identify vulnerable clients in the past six months, according to research from consultants Technical Connection, part of wealth manager SJP.

Financial advisers estimated 18% of their clients would qualify as vulnerable.

Six in ten of the advisers surveyed only recognised half of the vulnerability related conditions identified by the FCA.

According to the FCA, there are 28 million financially vulnerable adults in the UK, more than double the number estimated by financial advisers for the research.

Half of advisers (52%) had engaged with staff to discuss vulnerability and strategies to identify, support and provide appropriate solutions to clients showing vulnerability.

However only a third (32%) of advisers had formally 'hardwired' client vulnerability into their advice processes.

While 94% of advisers were aware of the regulatory responsibility on firms to address the issue of vulnerable clients, 24% said the requirements were over-burdensome.

Advisers rated themselves on average 7 out of 10 in terms of vulnerability readiness. Only 42% of advisers rated themselves as an 8 or higher.

Carla Brown, managing director at St. James’s Place senior partner practice Oakmere Wealth Management, said: “As a Financial Planner, I’m convinced that it’s essential to have formal processes for dealing with vulnerable clients. Not only is it the right thing to do as a responsible business, but it also makes good commercial sense.

“By failing to identify and work with vulnerable clients in the right way, you run a reputational risk. However, get it right and it can positively impact your relationship with a client and, in turn, create a strong advocate for your business. When clients find themselves in a vulnerable situation, this is your opportunity to really make that difference and be the safe pair of hands they need.”

• Ad Lucem surveyed 100 financial advisers on behalf of Technical Connection. Technical Connection is part of wealth manager St James’s Place.