The Worst Misconception About Advisors and Elder Financial Abuse

The Worst Misconception About Advisors and Elder Financial Abuse

Jan 30, 2017 | aging, diminished cognition, elder investor, elderly, financial elder abuse, scammers

Imagine this: your aging client is 86 years old, slightly grumpy, and he thinks he knows better than just about everyone else on nearly everything. He's quite willing to follow your advice, though and that's what makes a good relationship with him.

 

Lately, he's got you worried. He is obsessed with the internet. He spends many hours a day on it and he tells you about this man he met online who has an amazing investment he wants to get into. When he starts telling you about it, it sounds like a scam of the worst kind. You warn him not to do it and he says you don't understand.

 

He asks you to liquidate one of his investments you manage. You do it. He tells you how happy he is that he's got this great thing going now. A month later he calls you and wants to liquidate a lot of his funds to raise some significant cash for his "friend" who has the scammer-sounding "investment". You say, "don't do this!" He won't follow your advice. This is new, and puzzling. What should you do?

 

Rules tell you that you must follow your client's instruction and that you are not supposed to reveal his financial information to anyone. Should you call Adult Protective Services? Can you? You are not sure what to do.

 

Here's the answer: you are permitted to report financial elder abuse. According to the regulators' Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Persons, which discusses the issue in detail, you are also permitted to disclose this information to protect against or prevent actual or potential fraud.

 

But what if your client think his internet "friend" is fine even if you are seeing telltale signs of fraud in your client's interactions with the scammer? You can report the apparent crime in an online form to the FBI as long as you know enough detail from your client. I think anyone who suspects internet fraud should do this, even if it turns out to be some legitimate thing in the end. It probably isn't. And your client's money could all be gone if you do nothing. Would that be okay with you?

 

Financial professionals need to be clear about your role in preventing and stopping elder abuse. Law enforcement can't always stop the criminals but sometimes they do. No one can stop what is never reported to them. Do not be misled by the misconception that protecting your client's private information is supposed to stop you from reporting apparent fraud and abuse.

 

You could be the difference between your client's safety and your client being wiped out financially. Take a deeper dive and get very smart in an accredited one hour online course about stopping financial abuse. Click here now.

Carolyn Rosenblatt, R.N., Elder Law Attorney & Dr. Mikol Davis

co-founders of AgingInvestor.com and AgingParents.com

 

Aging Clients and Secrecy About Finances

Aging Clients and Secrecy About Finances

Jan 5, 2017 | aging, aging investor, diminished cognition, elder investor, finances for elders, power of attorney, senior investor, seniors finances

Have you ever had a stubborn older client who told you he'd never talk about his assets with anyone but you? He doesn't think he'll ever need help in his life and he wants to be in charge. When you suggest a family meeting to let someone else know what to do in case he ever became ill and unable to communicate, he shuts you down.   This is all too common.

A consistent obstacle to communication we see in our work is the resistance of the older person to discuss finances with anyone, including their adult children or other heirs. The Great Depression led to secrecy about finances for many, as fortunes were lost sometimes overnight and once proud people became impoverished. Talking openly about money was just not done for those who grew up in this time of widespread devastating and sometimes life-ending financial losses. To this segment of our population, openly discussing money was considered rude, unseemly. Some of these Depression-era survivors remain reluctant to tell anyone in their families where their accounts are, what their assets are and what they want done with their assets in the event of incapacity.

Presumably when you have a long-term relationship with your client, she trusts you and trusts your judgment. That gives you leverage. You may know more about her finances than her family, her friends or anyone in her life. You are charged with the task of long range planning and you look ahead. In doing so, it is up to you to urge your client, gently, repeatedly and with ongoing persistence that she find someone she can trust to appoint to protect her if she has an accident, falls ill, or can't speak for herself.

Sometimes persistence pays. The power of your relationship is a tool to persuade your client to come around. This is not a situation to ignore just because your client resists. The older she is, the more there is at risk. Anything can happen to her health at any time.

If your client resists, we encourage you to repeat your requesting a week or a month. Do it in a tactful way and paint a verbal picture for her of what would happen if she were no longer able to speak for herself. Tell her how frustrating it would be to have to refer her account to your legal department for a decision about getting a court involved if she could no longer communicate. Tell her how upset that would make you feel. Express your own concerns and make it your problem.

We hope that every single person in your book of business has an appointed trusted other for you to contact. You may well need that and it can be up to you to urge your client to take care of that most important piece of legal business, the Durable Power of Attorney, if she has not done this. Diminished capacity can sneak up on your client and you'll need help.

It's a new role you have with the oldest clients. They are living longer than they thought they would and with longevity come the risks of impairment in all ways.

If you'd like to take a little deeper dive into managing clients with diminished capacity, you can get a lot of expertise in a one hour online course by clicking here.

By Carolyn Rosenblatt, RN, Elder Law Attorney

AgingParents.com and AgingInvestor.com

The Art of Communication With Aging Clients

The Art of Communication With Aging Clients

Jun 17, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial capacity, investor, senior investor, seniors finances

Have you ever had an older client who didn’t want anyone, not even family, to know what his assets were? Did you find this secrecy about money to be a problem with a few of these older folks? It’s not so rare.

Everyone is entitled to privacy, of course, and the rules mandate that you not share a person’s private financial information. But what if your client begins to decline in his health? What if he starts to appear as if he’s “losing it”? Then are you supposed to just let him make mistakes and feel constrained that you can’t call a family member or anyone about his health? It does seem that most advisors do nothing until things reach a crisis point.

As aging experts, we think things should be handled differently. When you open every client file, you are not required to get the name of someone to call in case of emergency or in case of need. That is precisely what needs to change. Let’s consider common sense. If people are living longer than ever, their chances of developing cognitive impairment are consequently greater. With impairment, people lose their financial judgment. If you have a client’s trusted contact in the file, you may need it. And you can’t wait until your client is really, obviously impaired. If you do, she probably won’t want to give you anything. That puts you in a bad position. Your client is vulnerable to big mistakes and even to financial abuse. You don’t know what to do. You can’t call anyone and you wouldn’t know who to call even if you could.

Here’s the sensible solution: get the names and contact information of two trusted others for your client when you open any file. And with existing clients, ask them for the contact for two trusted people in their lives at the next portfolio review. Do it across the board for every single client. That way, when any one of them goes on to develop cognitive impairment, or dementia or has a stroke or anything disabling, you are not caught flat.   And how do you ask that secretive client for the names and for permission to call when, in your judgment, the need arises? You start by making it your problem. You let the client know that it is now office policy. You politely insist and you get it done.

Not every single client will immediately cooperate. Some will need your patient persuasion and tact to coax them to do this. That is one of those “soft skills‘ you absolutely need with your older clients. A few may refuse your request and you can’t force it on them. But for most clients, the encouragement from you to look to the future may be considered part of your job.

Senior clients can pose a number of communication issues with you besides being secretive about finances. Hearing loss, vision limitations and mobility issues can all make conversation more difficult. What you need to know to hone your skills and keep on top of these challenges is all spelled out for you in our book, Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. Check out the chapter, “Tough Talk: Communication Challenges With Aging Clients”. You’ll get those soft skills down in no time! Get your copy today by clicking HERE.

Can Financial Advisors Protect Aging Clients From Financial Abuse?

Can Financial Advisors Protect Aging Clients From Financial Abuse?

Jun 14, 2016 | aging, aging investor, financial elder abuse, senior citizen investor, senior investor

In his recent WSJ article, wealth advisor Paul Hynes raises this question.  He points out that financial advisors are in a unique position to observe their clients over years, sometimes decades and they know their clients’  normal patterns and general life situations.

I am particularly interested in the subject and I agree with Mr. Hynes that advisors are well positioned to learn of changes in clients’ lives and to see red flags such as unusual activity in their accounts.  He suggests that advisors should stay in communication with their clients’ families and that Adult Protective Services can be contacted if abuse is suspected. Here is where I question his advice as falling a bit short of what can be done.

As part of the national legal community dedicating time to the protection of vulnerable elders I see communications from lawyers all over the U.S. with complaints that Adult Protective Services are not taking financial elder abuse seriously enough in many places.  When it is reported, APS may dismiss it as “a civil matter” in which they have no interest.  APS is essentially an investigative help to the criminal justice system. It can intervene when an elder is in physical danger. Social workers and investigators from APS look into reports of abuse and help the DA determine whether there is evidence sufficient to prosecute a crime.  If the matter involves the undue influence of a family member and the elder seems willing to give away money, even if duped into doing so, APS is unlikely to take any action.

Financial advisors must not rely on the idea that APS will protect their clients when abuse is suspected.  Particularly in the case of family, close associates, and caregivers, APS may not wish to interfere unless or until an obvious crime has been committed. If is it not so obvious, it is up to others to take action to stop abuse. These others can include financial advisors, who may be in a highly trusted position with the elder.  Advisors will see unusual withdrawals in the account or other signs of danger.

The financial services industry, generally, has avoided certain kinds of communication with family of aging investors due to privacy laws, concerns which they interpret as precluding them from sharing financial information.  I do not agree that privacy should stop advisors from communication with family when an elder clearly needs protective action.  There is a way around the privacy question.  Policy can be created to obtain from every client a signed permission to communicate with a family member or trusted other appointed to step in when the advisor (and her compliance department or officer) has reasonably concluded that the elder is being taken advantage of financially or otherwise.

In his article, Paul Hynes suggests that wealth advisors should follow the notion “if you see something, say something” and I wholeheartedly agree.  However, the industry needs to develop new, forward looking, senior specific policies to address what Hynes correctly points out as the rampant problem of elder abuse.

I’m doing my part to help by developing educational materials (Including books and online courses) for industry professionals to recognize the red flags warning of potential abuse, diminished financial capacity and how to get the necessary document in place around the issue of privacy by obtaining a client’s permission to communicate with others. Aging expertise from outside the financial services field is needed for all of these points.  I hope everyone in the industry will pursue what FINRA (Financial Industry Regulatory Authority) has suggested since 2008: that advisors put senior-specific policies in place to assist them in stemming the rising tide of elder financial abuse of their own aging clients.

Until next time,
Carolyn Rosenblatt
AgingParents.com

Why You Shouldn’t Wait For Regulators To Tell You What To Do About Elder Abuse

Why You Shouldn’t Wait For Regulators To Tell You What To Do About Elder Abuse

May 6, 2016 | aging, elderly, financial elder abuse, senior investor

Investment News posted an article describing how the North American Securities Administrators Association has formed a new Committee on Senior Issues and Diminished Capacity, which will be headed by Montana Deputy Securities Commissioner Lynne Egan and include 13 regulators from across the country.The SEC Investor Advisory Committee has also tasked itself with what it described as an urgent need to protect retirees who are losing mental ability.

State enforcement statistics compiled by NASAA show that 34% of actions since 2008 involve senior victims.

These groups are very committed to finding out what best practices should be.  The NASAA committee could develop a model rule over the next year. With over a dozen people on a committee how many of you think they’ll have rules put together anytime soon?
 
Admittedly, this is an urgent problem.  Over $36B is stolen from elders every year, according to a recent study.  You can and should be developing your own best practices right now.
The longer we wait for government or any regulatory agency to tell us what to do about elder abuse, the longer we delay acting when we see it before our eyes. It doesn’t require a government rule or a professional organization’s sanction to act with common sense on your own.

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