How intermediaries can protect vulnerable clients
28 Jul, 2022

How intermediaries can protect vulnerable clients

Alfred Banda, Risk Specialist at Sanlam Individual Life

Cape Town, 14 July 2022: Life’s curveballs are striking South Africans across the board if Sanlam Individual Life’s 2021 claims payments are anything to go by – undoubtedly presenting a picture of the dire need for support and sound advice from intermediaries. The pandemic presented numerous challenges – including the loss of loved ones and jobs – all of which contributed towards the mental health struggles we have seen. As a result of the pandemic, the business also paid out R8.24 billion in claims in 2021 – double 2018’s figures.

Apart from the overall increase in the life company’s claims, 2021 saw an 82% increase in death and funeral claims (equivalent to R7.2 billion) compared to the previous year. The main reason for this increase in death claims was Covid-19, but there has also been an increase in deaths as the result of cancer and heart conditions since 2019. If one looks at severe illness and disability claims, the bulk of claims were for clients under 55, with more than half of the severe illness claims resulting from cancer.

Alfred Banda, Risk Specialist at Sanlam Individual Life, argues that a post pandemic world is strongly prompting people to seek human connection. He says now, more than ever, the need for reassurance and empathy places intermediaries in a position to identify their clients’ vulnerabilities and to put smart safeguards in place to help champion their greater resilience. “Money is, after all, a deeply personal subject and people often reveal extremely intimate details about their lives when seeking financial advice. In today’s world, this presents an opportunity for intermediaries to action relationship-led advice where coaching, encouragement and guidance all form part of the mix. It’s about framing risk conversations in a way that resonates.”

Having reassuring risk-related conversations

Banda says that claim statistics – such as those of Sanlam Individual Life – can be both enlightening and critical conversation starters to help break through the ‘it won’t happen to me’ mind-set often held by clients. It’s important to have these chats in a relationship-led way that focuses on connection and understanding.

Nick Clifton, Customer Experience Manager at Swiss Re Europe and SA, supports the belief that behavioural economics can help guide such conversations. He suggests explaining the financial advice process, connecting with a client on a personal level, understanding an individual’s loss aversion (fear of losing something they already have) as well as optimism bias (people hope for the best, which means they can forget to plan for the worst).

Caring for vulnerable clients

This approach can also help intermediaries identify clients who are ‘in trouble’ – physically, financially, or emotionally. Part of a relationship-led approach means sincerely caring for clients on a deeper level. That means recognising real vulnerabilities that may ‘go beyond the norm’ and have a negative effect on clients’ outcomes.

Financial Times reports a shift in how financial advisers recognise vulnerabilities in clients. In fact, the 2021 Financial Conduct Authority dedicated 50 pages on how to assist vulnerable clients at all levels. While intermediaries are not expected to take on the role of medical professionals, these are some of the ‘warning signs’ – potentially signalling vulnerability – identified by Financial Times:

A ‘360’ swing from previous intentions: A client gives new instructions that radically revoke or counteract past instructions. People do change their minds, but it can be a warning sign when this is at odds with their long-standing intentions and goals.
Obviously bad decisions: A client veers on a path that has quite obviously negative ramifications. Again, we all make bad decisions, but this could signal that someone has impaired cognitive functioning or is being influenced by a third party.
Incoherent instructions: A client seems to ramble or give instructions that simply don’t make sense. It can be difficult to articulate financial concepts, so this happens to everyone. But if someone gives consistently unclear instructions or seems to struggle with decision-making, it could be a warning sign.
Extremely emotional: Money and emotions frequently go hand in hand. But extreme displays of emotion may mean something else is at play. Mood changes might signal emotional distress or something more serious like a neurological disorder.
Another person is suddenly on the scene: It needs to be strongly ascertained that any third-party privy to a client’s accounts and decision-making is doing so with the client’s permission.

When an individual is anxious and displays multiple signs of not being themselves an intermediary may need to raise an alarm. This could be done via the family in a sensitive way that does not break a client’s confidentiality, or by suggesting a capacity assessment with a medical professional.

Importantly, young people can be vulnerable too, whether this is due to poor mental or physical health, or maybe a hugely distressing life event. Intermediaries are well placed to provide clients with support and reassurance and help put robust risk mitigation tactics in place.

Banda concludes, “We are committed to working with our intermediary partners to empower clients to move towards financial confidence. A significant part of this means ensuring they’re properly covered, not just for today, but for life-changing events in the years to come.

“At Sanlam, we don’t just deal with claims; we help clients when they’re at their most vulnerable, by finding reasons to pay, not the other way around. That’s how we honour our commitment – as evidenced by our claim statistics.”



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