Close up hands of caregiver doctor helping old woman at private clinic. Close up of hands of nurse holding a senior patient with walking stick. Elder woman using walking cane at nursing home with nurse holding hand for support. / Ridofranz

This article appears in the June 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Effectively protecting vulnerable clients has long been a challenge in the financial services industry. New rules related to curbing financial abuse and naming a trusted contact person (TCP), introduced in the client-focused reforms, have underlined that issue.

Investment Executive’s 2022 Dealers’ Report Card asked advisors with 11 dealer firms, “What issues are your senior/vulnerable clients dealing with the most?” The five possible answers included options such as health issues and income and return generation. There also was an “other” option, which was the most common response.

Of the 118 advisors who chose “other,” 31.4% said their vulnerable clients faced “all of the above” or “multiple” hurdles presented. But 17.8% of advisors who selected “other” elaborated by saying vulnerable clients’ lack of access to or understanding of technology was the main concern, and another 11.0% pointed to Covid-19-related isolation.

Many of those who chose “all of the above” or “multiple” said that staying on top of the evolving life and health situations of their clients can be difficult.

“I have experienced all of [those issues],” said an advisor in Ontario with Peak Financial Group. But fortunately, “there are more resources educating advisors on how to deal with [the challenges].”

“I’m constantly contacting my senior clients and their children, who are closer to my age,” said an advisor with Worldsource Wealth Management Ontario who chose the “other” option. Alongside the listed concerns, this advisor said, the new regulations regarding the naming of a TCP have been “very confusing” and some clients think “it’s a useless piece of paper.”

Richard Rizi, senior director of investment services with Worldsource Wealth Management, said the dealer has offered education on senior and vulnerable clients for many years, and that training on introducing a TCP has been added.

The Report Card also revealed that increased digitization may be creating more challenges for vulnerable clients.

“Everything is going electronic and I’m finding that a bit difficult, as [vulnerable clients] can’t navigate [the changes] easily. And it’s not necessarily an age thing,” said an advisor with IG Wealth Management in Ontario.

“It’s mainly online access. Senior clients need support around electronic statements,” said an advisor with IG Wealth in Alberta. “Seeing us in person is a challenge because of Covid.”

Traditional, non-digital resources are available for clients who want them, IG Wealth said in an email. The firm added that all advisors go through mandatory training about vulnerable clients.

While tech savviness can help with connectivity, the flood of negative current events and physical isolation also have been factors. An advisor with Carte Wealth Management Inc. said the stress of “handling the terrible news all the time and separation from friends” has been the biggest issue for their vulnerable clients.

Some of that bad news has included the climbing cost of living.

“[Vulnerable clients’] biggest fear is outliving their investments and now, with inflation being so high, [that also] would be a concern,” said an advisor in Quebec with Peak, who chose the income and return generation option.

Other advisors who chose the same option added that a persistent low-rate environment has meant vulnerable clients have needed to take on more risk to earn reasonable returns. However, an advisor with Investment Planning Counsel Inc. explained why doing so is difficult.

“If you follow the [regulations] for people over a certain age, they’re encouraged not to invest in certain things,” the advisor said. “Those of advanced age are being poorly served by the industry because the regulatory body has made decisions as to what they can and can’t [own]. Being old is not the same as being mentally disabled.”

Another advisor, however, said advanced age can lead to cognitive difficulties, and welcomed the increased regulatory oversight.

“Some [senior clients] have cognitive impairments and this is where the TCP [rules] are helping,” said a Manulife Securities advisor in B.C. “I’ve had some clients for over 20 years and there’s a lot of change happening,” with some seniors experiencing “really dark days.”

An IG Wealth advisor in Ontario suggested keeping an open mind about what’s worrying your vulnerable clients. Already, some “senior citizens are not living the retirement dream they thought they were going to.”

What issues are your senior/vulnerable clients dealing with the most?

A “vulnerable client” is defined as senior clients, children, people with disabilities and anyone who has a limitation that may make them vulnerable to financial abuse.

  • Choosing a trusted contact person (TCP): 5.4%
  • Health and wellness issues: 23.4%
  • Income and return generation: 25.4%
  • Suspected/potential for financial abuse: 5.8%
  • Other, including all of the above: 40.0%

Source: Investment Executive research. n=295. Note: Responses from Portfolio Strategies Corp. are included.