The Financial Vulnerability Taskforce, the industry body campaigning for better treatment of vulnerable clients, has launched a new guide to help planners work better with clients who are vulnerable due to experiencing ‘sudden wealth.’

The FVT has warned that these clients are particularly vulnerable to abusive or coercive behaviour or poor advice.

The guide comes after a much talked about Planner Casebook article in the latest Financial Planning Today magazine about a 92-year-old who won £1m on Premium Bonds but was subject to family pressure to hand over the cash.

You can read the article here: Financial Planning Today Magazine 

The Financial Vulnerability Taskforce (FVT) launched its new ‘good practice’ guide today on the vulnerable circumstances arising from the impact of sudden wealth or unexpected wealth transfer.

The FVT says that the number of clients in this category is set to rise based on forecasts of inter-generational wealth transfer figures. Many Financial Planners will come across clients in this category during their careers, the FVT believes.

The FVT warns that experiencing ‘sudden wealth’ can place a client in particularly vulnerable circumstances.

Keith Richards, chair of the Financial Vulnerability Taskforce, said the area was often forgotten but sudden wealth can create many challenges for vulnerable clients who may lack some or all capacity.

He said: “It’s often overlooked that suddenly receiving a windfall can create huge challenges for people, particularly where they are already vulnerable or not used to dealing with large amounts of money.”

"In line with the FCA’s expectations of dealing with vulnerable circumstances and consumer duty, we have today published two free to download guides on how to navigate the pitfalls of sudden wealth and to help professional advisers as part of a ‘good practice’ programme of sharing.

"The guides will help advisers to recognise and consider how ‘sudden wealth’ can place their clients in vulnerable circumstances and provide guidance on how to flex the advice process in these increasingly common, yet potentially vulnerable, set of circumstances.”

To complement the adviser guides, the FVT has also launched a consumer-facing guide for professional advisers to give to their clients or add to their website as an aid to helping consumers understand some of the difficulties they might face. This equally positions the value of professional regulated advice as a safe pair of hands.

The new guides coincide with a recent announcement by NS&I that it now signposts Premium Bonds £1m Jackpot prize winners to Chartered or Certified Financial Planners.

Robin Melley, Chartered and Certified Financial Planner, who has exclusively provided financial guidance and advice to NS&I Jackpot winners over the past eight years and has written the Planner Casebook for Financial Planning Today magazine, said: “I have witnessed many people ending up in vulnerable circumstances, either because of a jackpot win or suddenly receiving considerable wealth via inheritance.  

“I welcome the FVT’s focus on this often-overlooked area. It’s easy to believe that becoming wealthy can only be a positive but like any significant change in life circumstances, it can be linked to increased vulnerability, particularly in relation to financial abuse.”

The Financial Vulnerability Taskforce is an independent, not-for-profit body covering the Personal Finance, Insurance and wider professional services sectors. It aims promote greater understanding, encourage appropriate behaviours and establish good practice on consumer vulnerability.

• To find out more about the FVT, adopt the Financial Vulnerability Charter or download a guide, visit the website: www.fvtaskforce.com.