As the population ages, more people are talking about elder abuse.
The World Health Organization defines it as “…a single, or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person.” It defines financial elder abuse as “the illegal or improper exploitation or use of funds or other resources of the older person”.
Financial advisers are in a unique situation because they are among the few who may be able to detect elder abuse early and potentially act to stop it or put up barriers to try to prevent it.
While elder abuse is difficult to detect, there are several clues that may suggest to advisers that it is occurring. These include:
- unusual financial activity
- large or unusual redemption requests or withdrawals
- instructions for deposits into another person’s bank account
- when a family member or other person appears to be coercing a client; for example, by not allowing them to speak for themselves
- when a family member or other person will not allow a client to talk to their adviser without them also being present
- when a client appears fearful of the person accompanying them or withdrawn
- instructions by powers of attorney that do not appear to be in the interests of the client
- when a client lacks knowledge of, or is confused about, transactions involving their assets.
Advisers often have a long relationship with their clients. When they start to notice signs that financial elder may be occurring, they are faced with difficult choices. Professional Planner has previously written about an adviser who was exposed to claims of professional misconduct made to the regulator, and threats of a Financial Ombudsman Service claim, when trying to intervene. Advisers are in a difficult position whether they act or do nothing.
Proper planning helps
Recently, an adviser contacted us to discuss a situation concerning his own mother. She has been looking to migrate officially to Australia and live with him following the death of her husband. She is in her late 80s.
For the last two years, the adviser’s mother has been staying with him in Australia and his sister has been living in the mother’s home in London, rent free.
The adviser’s sister owns two houses on the Mornington Peninsula, from which she receives rent.
The mother needs to sell her home because she needs to prove to the Australian Government that she has adequate funds so that she can migrate to Australia. The adviser travelled to London to confront his sister about the matter; however, the sister refused to leave the mother’s house.
The sister has since made a counter offer; she wants her share of the inheritance now, because she believes she is entitled to stay in the mother’s home.
Given the property is in the UK, the adviser and his mother are now instructing lawyers in the UK to seek advice on how to remove the daughter from the house. Hindsight is a wonderful thing, and this situation could have been avoided with proper planning and agreement between the parties, binding or otherwise, about what would happen to the house if the mother wished to sell it.
What can advisers do to stop elder abuse (or at least minimise the chance of it occurring)?
There are some basic rules advisers should follow.
Train your staff: It is a good idea to have an internal policy, which may cover such things as escalation to appropriate managers, transactional delays to enable investigations to occur and what messages should be given to the potential abused and abuser when these steps are taken.
Start the conversation early: It is quite common in situations of elder abuse for possessions and property of older people to become the possessions and property of their abuser. You should, therefore, start the conversation with your client early so they can prepare, plan and be aware when and if it occurs. For instance, establishing powers of attorney with two well-selected attorneys can be an excellent check to prevent elder abuse by a single party.
Look for the signs but don’t jump to conclusions: Elder abuse is ultimately criminal conduct and it can involve a mix pf physical abuse, psychological abuse, financial abuse and neglect. If you suspect it is occurring, your role is to make factual records. You will need to make a judgement call. You can discuss it with an institution where funds are held, with your professional association and even with the police. You can even seek assistance from organisations and resources such as the elder abuse hotline in various states or groups such as Seniors Rights Victoria. It depends on the facts of each situation. The worst thing you can do is tell a suspected abuser that you think they are an abuser. That will only result in possible action against you by the accused (and/or the suspected victim) and you may ultimately be proven wrong.
Follow your processes: If you feel a potential abuser is pressuring you to take a course of action or make a transaction that you need to verify, follow your processes and say you need to perform certain tasks before you can take that action or implement that transaction. This is where standard form responses in an internal policy document become especially useful. It may not be possible to insist on meeting with your client alone. If the situation does not allow that, then a follow-up phone call to your client to confirm instructions (noted in their file) is highly recommended. Abusers tend to insist on being present at meetings.
Final Word: Remember that elderly people who are frail and in poor health struggle to deal with these situations and may take longer to arrive at a decision. They need supportive people who will not judge them and will be patient with them. Advisers who find themselves in these situations will devote much time to their clients for little financial reward.
If you feel yourself becoming emotionally invested, then you may not provide appropriate support, particularly if you find yourself becoming frustrated with the person to whom you are attempting to provide that support. It may be time to find another coping strategy or you may risk having yourself removed from the situation, which is probably the worst outcome for the client.
Rhett Das is a director of Integrity Compliance and a lawyer at Integrity Legal. Andre de Almeida is a Financial Services Compliance Consultant.