As you reach mid-life, your responsibilities may hit a peak. You could still have children living at home, be reaching milestones at work, and may also have aging parents or relatives who require your support and attention.
If you are in this position, you might feel stretched thin – and this feeling could cause you to become easily overwhelmed by the responsibilities you hold, especially when it comes to doing right by those in vulnerable circumstances.
Indeed, family members you support could be classed as “financially vulnerable”. The Financial Conduct Authority (FCA) has identified that 27.7 million adults in the UK are living with vulnerable characteristics, including:
· Ill health, including long-term physical or mental illness
· Experiencing negative life events such as grief or divorce
· Limited resilience to stress factors.
If you care for or support loved ones experiencing any or multiple of these circumstances, you might wish to offer advice or guidance when it comes to their wealth. You may even need to adopt some responsibility for this individual’s finances – something we’ll cover later in this article.
Here is how to better support vulnerable family members with their finances.
Three financial risks people in vulnerable circumstances can face
Firstly, it’s important to understand that everybody faces financial risks.
Yet those in vulnerable circumstances might have a heightened exposure to the following risks, and as someone who supports or cares for them, it is crucial to understand how they might be affected.
1. Making uninformed financial decisions
Anyone, no matter their circumstances, is at risk of making uninformed financial decisions. With so much information at our fingertips, it can be easy to make choices without understanding the potential consequences.
But those you care for, such as your elderly parents, may be even more at risk than you. Most financial information exists online these days, and if this individual doesn’t often navigate the internet, they might be susceptible to spending without understanding the consequences.
Similarly, those living with mental health conditions that make them prone to risky or impulsive behaviour could spend without thinking of how it might affect them.
2. Being abused or scammed
Sadly, financial scams are prevalent in today’s world. UK Finance’s Annual Fraud Report 2022 states that in 2021, criminals stole £1.3 billion pretending to be trusted institutions, such as HMRC or the NHS.
What’s more, financial abuse can go unnoticed, particularly when the victim is in vulnerable circumstances. Anyone could be a victim of financial abuse, but if the individual is unable to advocate for themselves, they may be further at risk.
Some signs of financial abuse include:
· Being locked out of financial decisions, despite having full capacity
· Being goaded into making wealth transfers by another family member, carer, friend, or neighbour
· Having money stolen by someone close to them
· Being manipulated out of pursuing opportunities that would cost money, such as taking up education, buying property, or going on holiday
· Being pressured into changing essential protective documents, such as a will.
Learning to spot these signs can help you support a person in vulnerable circumstances.
3. Lacking key protective measures
Some vulnerable individuals do not have key protective measures in place. These are especially important for people at risk of abuse or misinformation, to ensure they can make clear decisions about their own money.
Protective measures your loved ones could benefit from include:
· A will
· A Lasting Power of Attorney (LPA)
· Life insurance
· A personal health budget, which may entitle them to government funds, preventing your loved one from spending their savings on essential care.
Without these measures in place, those in vulnerable circumstances lose control of, or deplete, their wealth unnecessarily.
Three ways you can better support your vulnerable family members with their finances
1. Listen to their concerns and offer guidance
If you are in the care of, or generally act as a support towards, a vulnerable person in your family, it is important to listen to their concerns and offer guidance. One thing some vulnerable people may experience is being ignored, and this could be incredibly stressful, especially when it comes to their finances.
For instance, if an elderly family member is sceptical about the safety of internet banking, it would be easy to dismiss their worries – after all, you know that online banking through a legitimate institution is typically very safe.
However, by putting yourself in their shoes, you will realise that the online world is perhaps alien to this person. Understand that the world is changing fast, and this can be overwhelming – the Evening Standard reports that more than 5,000 bank branches have closed since 2015, for example – and this might make them feel as if they have no trusted options.
Ask yourself: “would I put my life savings in the hands of technology I fundamentally didn’t trust or understand?”
By practising empathy, you could offer better guidance and help this person feel affirmed in their financial worries.
2. Act as an advocate for their financial needs
As a supporter of a vulnerable person, your job is to advocate for that person’s needs, whether or not you fully agree with them. Provided the decision is not risky or unsafe, it is not your job to dictate how this person spends their money.
Alternatively, advocating for their financial needs can look like:
· Encouraging them to take out a financial LPA, a document that allocates an “attorney” who can take control of their finances if they lose capacity or no longer wish to make these decisions
· Accompanying them at important meetings, such as viewing a retirement home or speaking to a mortgage adviser
· Discussing their inheritance wishes, and helping empower them to put those in writing by making a will
· Helping them apply for a referral for a personal health budget through the NHS where applicable.
This support can make an individual in vulnerable circumstances feel more confident about their financial choices, and may help protect them from the risks listed above.
3. Seek the help of a financial planner
Although you are happy to help, shouldering your own financial load on top of your loved one’s wealth matters can be challenging.
So, working with a Kellands financial planner, either yourself or in partnership with your family member, could be a fantastic move. Knowing a seasoned professional is reviewing your decisions and providing expert advice could offer the financial peace of mind you deserve.
Get in touch
To discuss how you could better support a family member in vulnerable circumstances, email us at firstname.lastname@example.org, or call 0161 929 8838.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.