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This really happened. An advisor was managing a portfolio for a client we’ll call “Janet” with about $5M in assets. She seemed to be “with it” most of the time. But she had become confused in some of their conversations, unable to follow what her advisor was saying. (It was not complicated). She called several times in one week, asking the same questions over and over. She forgot that they had already been answered. She missed two appointments, apologizing that she had been really busy. The advisor didn’t seem to take all this seriously and didn’t do anything differently from how he had always interacted with this client.
Janet had always been a generous person. She liked to help people out. She got drawn into a “friendship” with a stranger, who was very sweet and complimentary to her and it made her feel good to hear all those nice things. He saw her often. And after awhile, he asked her for a loan. She gave it to him. He kept up the frequent calls and visits. Perhaps she was addicted to them. The loans continued. Her advisor was concerned, but he figured it’s her money and she can do what she wants with it. The amounts climbed, first to $100,000 in these “loans” and over three years the amount she had given to this false friend reached over $500,000. Of course he never intended to repay any of it.
The advisor finally seemed to catch on that something was wrong. He contacted Janet’s daughter, and steps were taken right away to stop the drain on her assets, stop the phony friend and stop Janet from making those poor decisions.
The takeaways that every advisor should know are these:
- When your clients seem confused, forgets phone conversations and misses two appointments, these are RED FLAGS of diminished capacity. The time to contact the family is right then, not after some disaster happens.
- Even if your client has ample assets, it is wrong to simply allow a predator to manipulate her or him out of them. You, the advisor have the obligation to do all things possible to stop financial manipulation. It is not an excuse that “it’s her money and she can do what she wants with it.” That aids and abets elder abuse.
- You need advance information in your file when you accept the client into your book. That information must include more than one alternate contact and written permission from your client in a legally sufficient document, to contact the responsible others when you see fit.
- An unusual change in your client’s spending pattern, such as Janet’s taking out huge sums to “loan” to this fake friend should be red flags of financial elder abuse for you. Please don’t wait until a thief takes a half a million dollars from someone before you catch on that something is very wrong here and you need to act right away.
If you are not sure about the warning signs of diminished capacity to look for, you can get a free checklist at AgingInvestor.com. Download yours today and you won’t make the same mistake as the anonymous advisor in this case study. If you aren’t sure about the major warning signs of financial elder abuse, we can help you there too, with another free checklist. Get yours right away and keep those aging clients financially safer.
Related: How to Have Calming Conversations With Upset Clients In This Pandemic