The Cambridge Dictionary defines “Vulnerable” as being “able to be easily physically, emotionally or mentally hurt, influenced or attacked”.
This is of course, a very broad definition and different people will see vulnerability in different ways. The way in which you perceive vulnerability may also depend in what capacity you are asked.
In day to day life, a vulnerable person could be:
- Your elderly next door neighbour who relies on you to some extent for help with their groceries.
- That one friend you have who is very trusting and possibly at risk of being taken advantage of by a door to door canvasser or cold caller.
- Your cousin who has recently lost a loved one and is consumed by grief.
- Your parents who are struggling with their mobility.
This list is not exhaustive.
From a financial advice perspective, it becomes less about physical vulnerability and more about an individual’s capability to make a rationalised decision.
Being in the later stages of your life or struggling with the stairs you used to be able to run up and down does not mean you are unable to make financial decisions although losing mental capacity, to whatever degree, probably will. Equally though, going through a difficult life experience such as separation or bereavement could affect your ability to consider the wider picture when making a decision (even though it may not feel like it does at the time).
Part of our role, as financial advisers, is to understand what’s important to our clients, what their hopes and aspirations are and what concerns them. We have regular meetings which are not just an opportunity to inform them about the progress of their portfolio or plans but also for us to keep abreast of personal circumstances and goals. We need to ensure that any plans and/or investments remain suitable and that when, or if, unforeseen problems or challenges appear, that there are contingency funds or plans in place to see them through.
This leads us to the question, are we all vulnerable at the moment?
Your own plans and/or investments are important and for many, will be earmarked for a particular purpose, whether it’s to cover your expenditure in retirement, to pay for that around the world trip you’ve been dreaming of or your children’s future education. It is important now, more than ever, to remember that, in the case of medium to long-term investments, the best way to benefit from any subsequent market correction is to remain invested. Time is a big mitigator of risk.
It is perfectly natural to feel uneasy. In a previous post, we made reference to behavioural finance and its effect on the markets. When we are emotionally attached to our financial plans and/or investments, we are not always rational or able to consider the wider picture when making a decision.
If you have any concerns or would just like to have a conversation, please contact our Financial Planning team.