In a year that has shone a light on the elderly, stuck in isolation and more exposed to financial abuse and mental decline, we spoke to later life specialists about the knowledge and skills wealth managers should be developing to serve them well.

When retirement specialist Just teamed up with the Society of Later Life Advisers (SOLLA) last year to train those advising the more vulnerable in society, little did they know what was around the corner.

Protecting the wellbeing of the elderly has come into sharp relief this year, with wealth managers playing an even more vigilant role.

Kelly Greig, head of later life practice at Irwin Mitchell, said that her firm saw “huge rises” in people scrambling to make wills and powers of attorney earlier in the year as the two most important determinations of "who is going to look after you in life and what’s going to happen after your death," she said.

The NHS began the surge, encouraging all of its frontline staff to get their affairs in order, followed by a second wave of furloughed workers with sudden time on their hands, Greig told this service in a call about how legal firms and wealth managers have been working more closely in a crisis year.

After issuing forbearance in the early months of disruptions, the Financial Conduct Authority released new guidance in July asking financial firms to step up protecting vulnerable clients.

Potentially vulnerable
The watchdog has identified around 50 per cent of UK adults as being potentially vulnerable – displayed in physical and mental health, recent life events such as bereavement, and capacity and financial resilience matters. Its figures were in stark contrast to a survey of wealth managers last year showing that firms identified vulnerable clients as only 1 to 5 per cent of their total client base.

Since FCA tightening, Irwin Mitchell has worked more closely with financial institutions, training staff to spot when a client might be open to financial abuse and how to respond.

Financial crime of all stripes has spiked this year for obvious reasons but the older in society have arguably been most exposed.

As a legal deputy assigned by the Court of Protection to vouch for vulnerable clients, Greig says: “those shielding have created an ideal excuse for someone to say, ‘Oh you can’t get out to the bank, let me take your card for you. Give me your pin number and I will get your pension money out for you. Or 'my mum can’t come in to see you, therefore you have to accept these instructions.’”

The firm has been training advisors to meet their vulnerable client policies and comply with the FCA but Greig argues that protecting against financial abuse can't all be learned in a manual. Advisors especially now need soft skills to spot when alarm bells are ringing, she said. This extra attention has been doubly challenging in a yo-yo year of lockdowns and tierings where phyiscal visits have been replaced by emails or phone calls, often made by third parties.

The national law firm has seen a big rise in financial abuse within families this year.

“The majority of cases don’t tend to be a random sales person trying to scam you. It is a family member that has stolen your money. Mum doesn’t need it any more, she is in a care home. Or she would have given it to me anyway if she were able to agree to it,’" Greig explains.

A lack of social interaction during lockdowns and its part in cognitive decline has led concern. It also raises questions of what tough social restrictions have done for the mental health of younger clients, another concern for advisors.

A study last year by consultancy Altus on those most vulnerable to financial abuse found that a third of victims were aged between 25 and 34, and one in four adults have experienced at least one mental disorder in a given year. These were figures collated before the pandemic worsened conditions. The group recommended that advisors "continually reassess the vulnerability of their clients" as they are increasingly likely to experience it.

SOLLA founder Tish Hanifan said that her organisation, which runs accreditation programmes for advisors specialising in later life advice, has been inundated with advisors wanting more training and knowledge since lockdown. Much of this has been adapting the soft skills needed for remote working and communicating with older clients not comfortable with technology.

One of the most important skills is still “listening,” Hanifan said. Another is being able to read cues over video and be alert to signs of insidious financial abuse, including who might be in the room with a client. Hanifan's group has also produced training with members of the National Dignity Council to develop communication skills in the advisory community, some of it directed at those working with dementia clients.

Understanding a person's ability to make financial decisions is another piece of the advisory armoury being tested this year.

It is not black or white, I am capable or incapable, Irwin Mitchell's Greig says. The test of whether a person has the capacity to take action for themselves depends on the action. Clients may be capable of managing small amounts of money but not capable of understanding or making big investment decisions.

“The Mental Capacity Act is very clear that the client should be involved in the process as far as they are able. And even if you are not capable of making the decision, if you are able to participate, you should,” she said.

Wealth managers need to do all they can to understand their client’s level of capacity "and not just accept instructions from an attorney or deputy or a third party without involving the actual individual in the process if they are able to be involved.”

The five principles of the 2005 Mental Capacity Act state: Always assume capacity; provide reasonable support; accept that the customer can make unwise decisions; act in the customer’s best interest; and take the least restrictive option.

Greig has seen deterioration among some of her own clients from prolonged spells shielding but says there is no easy way currently to build a national picture of how the pandemic is worsening the decline.

“It is simple things like, it is not easy to get an actual doctor’s appointment where capacity deterioration might have been picked up in a face-to-face appointment, and people are not seeing individuals or friends as much.”

Besides ensuring that every client has an up-to-date will in place, and powers of attorney for both health and welfare and property and affairs, Greig urges advisors working with vulnerable clients to have a case synopsis on file about family relationships. “If there is anyone in the family who presents as being suspect, just some information about the family on file can help.”

Most important is knowing what acting deputies "can and can’t do and watch for any changes in instructions or anything that doesn’t smell right.”

“I’ve had conversations with wealth managers before who’ve said, ‘Well, of course I paid that sum to Joe Blogs because the attorney said we were making a gift.’ But the attorney does not have authority to make a gift unless you have a court order and a wealth manager hasn’t known that.”

Another example is you can’t invest in a portfolio if the instruction is from an attorney who is also a beneficiary, not without a court order, she explained.

“In training recently with a group of national financial advisory firms, I’ve had to say, ‘Guess what, if you do that I am going to sue you for professional negligence. You are in breach of your duties.’ Suddenly they realise that they do need some education on this.”