Dependency: The blind spot in financial planning

The Hidden Form of Vulnerability Financial Planning Often Misses

The Financial Conduct Authority published an interesting piece of work on 13th March titled “Consumer Duty: Consumer Understanding – Good Practice and Areas for Improvement.”

Much of the paper focuses on how firms communicate with customers and how well consumers understand the financial decisions they are making.

But reading it raises a broader question for financial planning.

How early in the advisory process do firms identify dependency within a family structure?

Dependency is not always visible in the client sitting across the table. Often it sits somewhere else in the household. It might be a disabled dependent adult who will rely on financial support for the rest of their life. It might be a vulnerable beneficiary within a trust. It might be an older relative requiring long-term care.

Where dependency exists, financial planning decisions often behave very differently.

Trust structures may need to operate for much longer time horizons. Liquidity planning may need to account for care costs or supported living arrangements. Governance structures suddenly matter far more, particularly when decision-making authority shifts across generations.

None of this is new from a technical perspective. Financial services already has the legal structures, investment expertise and governance mechanisms required to support complex families.

What is much less common is the early identification of dependency itself.

In many advisory processes these dynamics emerge relatively late. They often surface during trust discussions, succession planning conversations, or sometimes only after a bereavement has occurred.

By that stage, financial structures may already be in place.

The FCA’s work on consumer understanding encourages firms to think carefully about how vulnerability is recognised and addressed. Much of that discussion focuses on communication and disclosure.

But vulnerability can also exist structurally, in the way families depend on one another financially.

Where dependency exists, the consequences of financial planning decisions can extend across decades and affect individuals who may never have been part of the original conversation.

That is why identifying dependency early matters.