Your Broker as Elder Abuse Backstop

Who would you want your financial advisor to contact if he thinks you’re being scammed or just slipping in cognitive ability? With the increase in elder financial abuse, more firms are rolling out an emergency contact form to have on file if something seems amiss. “It’s not the easiest conversation, but it’s part of an appropriate life planning conversation,” says Ronald Long, director of Wells Fargo’s Elder Client Initiative.

Wells Fargo introduced its in case of emergency (“Emergency Contact Authorization”) forms in the field this month. New clients will be asked to fill out the form when they open an account, and existing clients will hear about the form at their next sit-down with their advisor.

The idea is that you pick a trusted person your advisor can contact if questions arise about your health (capacity and well-being) or welfare (endangerment, self-neglect, or financial exploitation). Note: unlike an agent named on a financial power of attorney form, an emergency contact can’t make transactions or give directions over your account.

When industry players and government regulators came together to discuss ways to safeguard seniors at an Insured Retirement Institute Older Investors Summit earlier this month, the contact authorization form came up as one way to help vulnerable clients. (Of course, it helps the firms with liability and privacy issues too.) Jennifer Lewis, corporate counsel at MetLife, said her firm is working on a version. LPL Financial and Ameriprise already have these forms in use.

“Normal aging is going to make you vulnerable; when you have the capacity, you need to pick the right trusted person who will help you going forward,” said Nora Eisenhower, assistant director of the Consumer Financial Protection Bureau’s Office of Older Americans, speaking at the IRI summit.

Walter White, president and ceo of Allianz Life, noted that only 8% of elders victimized said they currently discussed their finances with another person. “We have to do better engaging those conversations,” he says. Allianz encourages its network of independent advisors to engage with the client and the clients “influencers.”

Almost all the speakers shared a personal story about how elder financial abuse or cognitive impairment has impacted their families. John Papadopulos, president of Wells Fargo Retirement, related how he had to fire his mother-in-law’s live-in caregiver who had let her husband move in and was taking financial liberties. Judith Kozlowski, senior advisor for elder justice with the Department of Health and Human Services spoke of how she’s recently started handling finances for her 95-year-old father, an engineer whose high numeracy skills just started failing, and how she restructured her work life so she was able to care for her late mother who died at 95 with vascular dementia.

Most people will need help earlier. Women 85 and older face the highest risk of financial abuse. Yet people of all ages are susceptible to fraud, noted Gregory Samanez-Larkin, an assistant professor of psychology at Yale. Older investors are just over-targeted—they have more money for one thing.

“Financial advisors are in a unique position to detect abuse,” said Allianz’ White. If an advisor suspects financial abuse or fraud, there’s a system for reporting suspicious activity to the Department of Treasury’s FinCEN network, and in some cases it calls for bringing in the state adult protective services agency. But what to do with issues of cognitive impairment is trickier. Usually advisors will contact spouses or children.

In one case the Wells Fargo’s team worked on, a client told her advisor she needed to withdraw $13,000 to pay for security upgrades to her computer. The advisor confirmed it was a scam and called on a family member to check up on the elder.

In another case, a 78-year-old man in California thought he’d won the Costa Rican lottery, hoping the supposed $4 million winnings would help his 76-year-old wife who had health problems. The man had already given $80,000 from an account at another financial services firm to the scammers and told his Wells Fargo advisor he needed more: “’You’ll be happy next week, I’m bringing in a lot of money,’” Long said the man told the advisor. When the advisor refused to release the funds, the man got his family attorney involved–that led to the man’s daughter being appointed his guardian. “It’s easier to keep the money here and have the client unhappy than to let the money go to a scammer,” Long says.

What if there’s no contact form on file? The Missouri legislature just passed a law that allows firms with Missouri clients to call on a child or other trusted person not necessarily on a form if there’s an issue of something suspicious or cognitive decline. It was modeled after similar laws in Washington and Delaware, but goes one step further by allowing a 10-day hold on transactions.

The emergency contact form is a good place to start, but don’t stop there. You can grant someone read-only online access to your financial accounts or have duplicate statements mailed out. You should consider naming one trusted person to act as your agent (under a durable financial power of attorney)—typically your spouse or a trusted child but it could be a friend or family lawyer. And to the extent you feel they are trustworthy, you should involve all your family members in financial conversations.

Your Broker As Elder Abuse Backstop
Ashlea Ebeling / Forbes