"We don't have vulnerable investors, we have people who may be in vulnerable situations"

[Marc]

The Society of Financial Planners Ireland (www.sfpi.ie) held our annual conference yesterday.

Topics covered included

Patricia Rickard-Clarke and Áine Flynn discussing the Assisted Decision-Making (Capacity) Act 2015.

The key take home being that in Society we don't have "vulnerable people" we have people with rights to dignity and respect who may find themselves in "vulnerable situations".

This legislation will have far-reaching implications for Financial Planning Professionals and, as primary legislation which incorporates the provisions of the UN Declaration on Human Rights, will trump the consumer protection code which will need to be revised in this area.

Paul Grimes, CEO of the Financial Planning Standards Board, gave an address which set out the importance of working with a Certified Financial Planner Professional and this message was reinforced by well-known personal finance journalist Jill Kerby, who dramatically emptied a huge sack of letters from readers who had been desperately let down by Financial Services providers over the last 25 years.

 

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The key take home being that in Society we don't have "vulnerable people" we have people with rights to dignity and respect who may find themselves in "vulnerable situations".

But we do have vulnerable people.

People of limited intelligence.
People emotionally vulnerable through grief, loneliness, isolation or frustration.
People psychologically vulnerable through traumatic experiences.
People socially vulnerable through having no reliable friends in their corner.
People without the expertise in investments to evaluate investment suggestions.
Even people so busy that they haven't the time to check propositions even on a common sense basis, never mind with critical financial expertise.

To people like this Rickard-Clarke and Flynn's distinction is very academic as they cannot practically separate themselves from their situation of vulnerability.
To alll intent and purposes, they are where they are - not least through the eyes of a wide-boy.

 

[Marc]

Topic very close to my heart and very aware of the issues thanks as I have a child with special needs.

The presumption of capacity is not an acedemic concept it is enshrined in UN declaration on Human Rights article 1

“All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.”

 

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And - philosophically - most of us would agree.

But real world protection for the vulnerable (this really is all of us really) operates on real concrete safeguards, not philosophical ones.
In recent decades we've seen the real societal need for cooling-off periods, right to change acting attorney, second opinions and so on in these matters. Maybe more thought might be given to long-term performance related commissions rather than simple sales related commissions for investment products.