FA Center: How financial advisers can help fight elder financial abuse

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There’s more awareness of senior investment fraud than ever before. Still, most cases of senior financial fraud are not discovered before they cause serious problems, according to a new survey of state securities regulators, who believe broker-dealers and investment advisers aren’t doing enough to fight fraud.

Seniors and their loved ones are an obvious line of defense: They can watch for suspicious behavior and suspicious account activity, says Mike Rothman, president of the North American Securities Administrators Association and Minnesota State Commerce Commissioner.

Read: How to protect your family members — or yourself — from elder abuse

But financial advisers can also do more — and they might be better positioned to spot problems before it’s too late. To help, NASAA suggests that advisers watch for signs of suspicious behavior from their older clients that might point to deeper problems:

• The client has moved from existing relationships toward new associations with “friends” or strangers who show excessive interest in their finances or accounts, refuse to allow them to speak during meetings, or are reluctant to leave them alone with — or speak directly to — an adviser

• The client shows an unusual degree of fear, anxiety, submissiveness or deference toward their new associates

• The client shows unusual excitement over an investment opportunity or financial windfall

• A new associate suddenly begins conducting financial transactions on a client’s behalf without proper documentation or through a sudden change of Power of Attorney

• The client makes abrupt changes to financial documents, such as power of attorney, account beneficiaries, wills, trusts, property titles, and deeds, or changes their address on accounts to a new place far from their home

• The client, uncharacteristically, fails to pay for services, which may indicate a loss of funds or access to funds, or closes accounts without regard to penalties.

• The client makes substantial changes to their established financial management habits, such as frequent large withdrawals, uncharacteristic attempts to wire large sums of money, sudden new credit card balances, large withdrawals from previously inactive accounts, the establishment of new joint accounts, and unusual signatures on documents

• A client’s funds or other valuable possessions disappear without explanation

Rothman asks advisers who suspect possible fraud or abuse should reach out to their local securities regulator. They should also follow their company’s own internal process — which, according to NASAA’s Bob Webster, should be clear and documented. (You can find the right securities regulator via NASAA’s website, and guidelines for advisers are available on NASAA’s Serve Our Seniors website.)

Read: How to protect elderly loved ones from financial ruin

Advisers don’t need proof to report something — and shouldn’t worry that the amounts in question might be too small. “It is the job of proper authorities, whether state securities regulators, adult protective services or law enforcement to determine if exploitation is occurring. And, the more quickly a report is made, the faster financial exploitation can be stopped.”

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This story was first published on Sept. 20, 2017.