A major concern of financial advisors is senior financial abuse. Until recently our hands have been tied for fear of liability breaking privacy laws by contacting family members or halting suspicious transactions. Many advisors are aware their elderly clients are being scammed or taken advantage of by unscrupulous relatives. Client conversations curtail some activities but most advisers hands were tied as they watched assets be drained away.
Finally some protective measures have been put into place effective February 2018:
1. when a new account is opened by someone over 65 the broker or advisor must request the name of a trusted contact person who may be called about questionable transactions. This trusted individual may also share current contact and health concerns as well as guardian, trustee or POA (power of attorney) holder.
The brokerage firm may also request the name of a trusted contact person when it annually or biannually updates records and pertinent account information.
2. brokers are now allowed to place a temporary hold on disbursements they deem suspicious. The rule not only covers investors over 65 but also account holders with mental or physical impairments who may show difficulty protecting their own financial interests. Before making disbursements the broker or money manager may put a temporary hold on the money while he/she investigates and reaches out to the investor, trusted contact or appropriate agency including the police.
This is a big step in the right direction. Now firms may use the trusted contact as a resource to protect assets of the elderly and help reduce financial exploitation. It also allows for proactive measures to stop the crime as once the assets are gone, there is little chance of recovery from fraudsters and scam artists.
Be $ Smart - Encourage your elderly friends and relatives to register a trusted contact with their financial institutions as protection against fraud.
