Financial Advisors Join the Fight Against Elder Financial Abuse

Both banks and financial advisors are starting to take a more pro-active role in preventing financial abuse. It’s common sense, since they are often the first to see questionable transactions.

Don’t be surprised if your next visit to a financial advisor or a personal banker includes a conversation about providing the name and contact information for a relative or trusted friend. That information is so the advisor or banker can reach out to someone on your behalf, if they have a reasonable belief that you are about to become or have become the victim of a scammer.

Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. When money leaves an account, it’s hard to get it back.

Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.

Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.

Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines of spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.

Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.

Being named a trusted contact is different from being named a durable power of attorney. Your trusted contact may not conduct any business on your behalf, and a power of attorney supersedes it. However, if there is worrisome behavior, your trusted point of contact may be notified. If the banker or adviser thinks that the contact him or herself may be the point of exploitation, they are now instructed to contact the authorities directly.

Reference: Kiplinger (April 3, 2019) “New Rules Battle Financial Scams, Elder Abuse”