As advisors become increasingly aware of the threat of financial elder abuse, firms are expecting them to take action to protect their clients, often by reporting suspicions to supervisors or compliance officers.
"You have to be careful," says Emily Drake, a partner and senior advisor at Fairport Asset Management in Cleveland. "As right as you may be in serving the client and their interests, there may be people involved in their lives who won't see you as being right. There are other parties that are out there that might not like what you're doing."
In the case of financial elder abuse, the situation can become difficult for advisors to navigate because the perpetrators are usually not strangers but, most often, relatives or others who have very close relationships to their victims.
Frequently, they will even employ forms of emotional blackmail that anyone familiar with dysfunctional families will recognize. Children will threaten not to visit or call older parents, sometimes subtly and sometimes more overtly, say advisors and social workers.
"They'll say, 'If you don't sign this paper, nobody's going to take care of you, nobody's going to come to see you' – that's a typical example," says Betty Malks, chairwoman of the Elder Financial Exploitation Advisory Board of the National Adult Protective Services Association.
"That's a real threat," agrees San Francisco-based LPL-affiliated advisor Stephen Lovell, who says he has run into that dynamic several times in his two decades of practice. But, he says, that's when a client most needs his help as an advisor and often the services of a lawyer, and Lovell will make the referral.
"In those situations, I'll say to the client, 'I know you love your son, but, frankly, you should not give the house to him before you pass away because it's not a good decision,'" Lovell says.
Lovell adds that his clients in those circumstances have sometimes been aware of their relatives' predatory intentions, but, even so, they still need his support. "They frequently know that a financial request is weird," he says. "And it helps if the financial advisor can affirm what they believe."
That's why advisors emphasize the importance of planning contingencies long before a client's abilities may falter. Advisors should discuss clients' wishes and get to know relatives and other people in their lives when they're healthy, so it becomes easier to spot changes or suspicious activity later on.
TRUST YOUR INSTINCT
A firm's protocols and escalation ladders can help to give guidance to advisors and protections to clients. At Wells Fargo Advisors, any employees who have concerns about older clients are trained to call a nine-person unit focused on elder client issues at the company's headquarters in St. Louis. "We're asking FAs to reach out and lean on us and not feel they have to figure it all out for themselves," says Ron Long, Wells Fargo Advisors' director of elder client initiatives.
The unit helps advisors evaluate the situation and, where necessary, contact adult protective services agencies, whose rules and procedures vary by state.
Advisors should follow their firm's reporting protocols, which generally means informing lawyers or compliance officers, who can provide guidance and coordinate contacts with authorities, if necessary.
But it all starts with advisors being familiar enough with their clients and families to know when something is out of the ordinary, says NAPSA's Malks. Backed with that knowledge, she says, financial advisors can more easily trust their instincts. "If you feel something in the pit of your stomach that says something's not the way it should be," Malks says, "then usually your suspicion is right."
Paul Hechinger is a New York-based freelance writer.
This story is part of a 30-day series on better serving seniors.