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There are several red flags advisors should look out for if they believe senior clients are being taken advantage of financially by those close to them. jfmdesign/iStockPhoto / Getty Images |
One in five seniors will experience the abuse in which family members, caregivers or so-called friends take advantage of an elderly person’s finances, says Laura Tamblyn Watts, president and chief executive officer of CanAge, a national seniors’ advocacy group, who also teaches a course on law and aging at the University of Toronto. If online and phone phishing scams perpetrated by strangers are included, the number is even higher.
“Elder abuse and neglect is skyrocketing, and it appears during the time of COVID-19, it’s going to get worse, not better,” she says.
The reasons are double-barrelled. Adult children who have been supported by government dollars to ride out the pandemic will eventually lose that funding and may turn to parents for financial support – even if those parents need that money, too. And the pandemic’s physical distancing measures have also forced many seniors to become more isolated, making them especially vulnerable to abuse.
For financial advisors, touching base with senior clients is more important than ever, and they should use the opportunity to look for signs of financial exploitation, from the seemingly innocent – the daughter who buys groceries for her mother each week but pockets $50 in change – to the outright insidious: a new “friend” who tries to get a client to change her will.
“That’s where advisors can be very beneficial,” says Kathy Majowski, board chair for the Canadian Network for the Prevention of Elder Abuse. “It’s about developing that relationship with an older adult and saying, ‘Are you okay? Do you need some help?’”
The more blatant cases of financial abuse against clients with obvious signs of cognitive decline are easy to detect and mitigate. But not every situation is as clear cut, says Leanne Kaufman, president and CEO of RBC Royal Trust. In cases in which parents want to give money to adult children or other family members, it’s a grey area.
“‘A fine line’ is a great way to put it,” she says. “It’s very nuanced and there’s clearly a balance between agency and respecting the wishes and decisions of the client.”
To determine what’s happening with a senior client behind closed doors, it’s important to know what financial elder abuse actually looks like. Ms. Majowski says advisors should be on the lookout for coercion – an elderly client is feeling pressured to give money, or they’re being made to feel guilty if they don’t.
She says she’ll sometimes hear about adult children saying, “You have to help me because I get your groceries or drive you to the doctor’s office. I’m helping you deposit your cheques, so you owe me.”
There are other red flags advisors should consider. Keep an eye out for older clients who are financially responsible suddenly bouncing cheques, can’t pay their bills, or are getting their phone and utilities cut off. The, there are new, so-called friends, caregivers, or distant relatives who are taking an unusual interest in your client’s financial dealings or are asking about an early inheritance. They may suddenly want to be on all the phone calls or virtual meetings, ready to intercept if questions start to probe uncomfortable areas.
One of the key benefits of the client-advisor relationship is that it’s built over time, so asking pointed questions such as, “Is your son refusing to take you to the doctor unless you pay his mortgage this month?” or “Does somebody else have control over your bank account?” likely won’t feel as though they are coming out of the blue.
Nevertheless, Ms. Majowski says it can still take a bit of time to work up to direct questions, though. Advisors who have suspicions of financial elder abuse may have to start with more open-ended queries first.
Even if there doesn’t seem to be any abuse going on, it’s still important to walk through any large fund transfers with the clients and explain exactly what letting go of that money would mean to them in the long term. That’s especially true of requests that appear to be urgent. Ms. Majowski says hasty decision-making is another hallmark of financial abuse, so she advises people to take a day or two as a cooling-off period before moving funds or assets to a friend or relative.
“After a few days, there can be a feeling of, ‘Oh my god, I can’t believe I almost fell for it,’” she says.
So, what should advisors do if they suspect an elderly client is being abused? Don’t be afraid to get a second opinion or call in for support from your firm’s compliance department or legal department, Ms. Kaufman says.
Advisors can also visit the Investment Funds Institute of Canada’s Vulnerable Investors Resource Centre to learn how to report wrongdoing, and keep a file that documents all the steps they have taken with the client in question. Also, advisors should contact the client’s power of attorney or trusted contact, if they exist, unless, of course, that’s the person there are concerns about.
Ultimately, it’s vital advisors remember who their client is. No matter how sticky or fraught things may get within a family, it’s the senior who originally hired them, Ms. Tamblyn Watts says.
“That’s
not to say that advisors shouldn’t listen to everyone and be
compassionate,” she says. “But they must know their client – and their
client is not the adult child.”
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