Financial advisers are in a prime position to stop elder financial abuse, but spotting the signs and having the difficult conversation that follows is something the industry is still grappling with.
Anne McGowan, founder and chief executive of Protecting Seniors Wealth, says the ambiguity of some abuse situations makes well-meaning advisers blind to the signs if they haven’t been informed.
“We find that many professionals don’t quite understand how it occurs and the extent to which it occurs,” she says.
There is also a misconception that it occurs only to people in their 80s and 90s. McGowan has seen cases of well-educated professionals in their 70s whose aged-care funds have been raided.
She is confident, however, that with the Australian Law Reform Commission’s recently tabled report, and media coverage of elder abuse within aged-care facilities, general awareness of the issue is where it needs to be, if not the knowledge of the signs and remedies.
She says financial advisers are on the front line and should watch for the following:
- A new person you haven’t met before – either a family member or friend – coming along to client meetings and assisting the older person
- A sudden change in the client’s demeanor; they may lose confidence and be unable to look you or their family member/friend in the eyes
- A large withdrawal that the older person cannot properly detail.
Anna Hacker, national manager of estate planning at Australian Unity, adds that abusers often try to isolate the older person from loved ones, which can be another clue. If something doesn’t look quite right, she suggests seeking an opinion from a lawyer or fellow adviser.
“The proof is often in the paperwork,” says McGowan, who warns predators sometimes work up to financial abuse gradually.
If abuse is suspected, McGowan recommends a detailed look at recent financial transactions and a private conversation with the potential victim, using open-ended questions.
“What a professional person doesn’t want to do is be too frightened to look at all the details,” she says.
An emerging trend
The Financial Ombudsman Service (FOS) states that elder abuse is firmly on its radar, after an increase in the number of disputes relating to seniors and wealth transfer.
Dr June Smith, lead ombudsman, advice, says, “We are seeing an emerging trend in intergenerational advice disputes.”
FOS has recently turned its attention to helping institutions and planners identify red flags in an effort to combat predatory behaviour. Smith says the service plans to work with the financial planning industry to formalise what constitutes best practice.
“Our focus will be on what an ethical adviser would do if they had an intergenerational dispute,” she says.
FOS can award compensation and reinstate funds that have been wrongly removed from victims’ bank accounts.
For more on elder financial abuse, read the December/January edition of Professional Planner, coming later this month.