Advisors: Help Clients Find Quality Financial Caregivers | Financial Advisors

A Place for Mom, a caregiving resource website, recently reported that 17% of the U.S. adult population provides unpaid care to an adult over the age of 50. It’s clear that caregiving is a very important part of the U.S. social fabric.

Since financial caregiving is a large part of caregiving, financial advisors must ensure that their clients are getting the best value from it.

This is especially important given that up to 5 million Americans suffer from financial elder abuse each year, according to the National Council on Aging, and family members or financial caregivers are often the ones responsible for elder abuse.

So, what can financial advisors do to help their clients get the best out of financial caregiving?

Since financial caregivers are some of the most common sources of financial elder abuse, advisors who want to protect their clients should get involved in the process of selecting a financial caregiver.

Before clients begin experiencing any cognitive decline, advisors can discuss this topic with them and counsel them on the characteristics they should look for in a financial caregiver, such as trust, financial stability and discipline.

Even after selecting a credible financial caregiver, advisors should be on the alert for clues that the caregiver may be exploiting the elder’s situation.

Many financial institutions require account holders to name a trusted person who can be contacted on their behalf in certain situations. Such situations might involve unusual activities or other red flags on the account.

An account holder’s trusted contact can receive duplicate financial statements and identify suspicious activities on the elder’s account to head off problems.

Though the trusted contact doesn’t have the ability to carry out transactions or make other financial decisions, he or she can be an extra pair of eyes to help identify ongoing or potential financial elder abuse.

Financial advisors should work with elders while they still have good cognitive capability to select a dependable person as their trusted contact.

A power of attorney, or POA, confers on someone the authority to make important decisions on behalf of another person. This is especially important for elders who will need such a person if they become cognitively impaired.

It is essential that advisors help their clients select a reliable person who will be trusted with this power. But also, advisors should ensure that the financial caregiver, trusted contact and the person with POA are different people.

This decentralization is key: It will ensure that each person is held accountable, to some extent, by another person who also has the elder’s interests at heart.

Even when a financial advisor has done all of the above, financial elder abuse can still take place.

Therefore, advisors must be well equipped to identify ongoing and potential abuse and report it to the appropriate authorities.

The Senior Safe Act, which became law in 2018, protects financial advisors and other “covered financial institutions” from liability if they make a report about the potential exploitation of an elder, as long as they make the report to a “covered agency,” such as a state financial regulatory authority, the Securities and Exchange Commission, an adult protective services agency, or a federal law enforcement agency.

In order for financial professionals to qualify for immunity, employees of financial advisors who deal directly with elders must receive training on how to identify and report elder abuse. The law also requires reports to be made in good faith and with reasonable care.

The main point here is that financial advisors must learn – in conjunction with trusted contacts, financial caregivers and those with power of attorney – to quickly identify ongoing or potential abuse and nip it in the bud by filing a report.

Prevention is still better than a cure. And financial advisors can counsel clients and their financial caregivers to use various cybersecurity solutions that will protect them from abuse.

Norton’s LifeLock, Identity Guard and ID Watchdog, among others, are cybersecurity solutions that elders can use to protect themselves online.

Another option is Carefull, which is software that caregivers can use to protect and manage the finances of elders. The software includes various cybersecurity solutions such as identity protection, password management, smart account monitoring and credit monitoring.

When it comes to bill payment, SilverBills is another software that incorporates various security features, such as two-factor authentication, a network of firewalls and encryption algorithms, to ensure elders are not sending money in response to fraudulent bill requests.

There are plenty of measures that financial advisors can take to ensure that their elderly clients are getting the best from financial caregivers and are not victims of financial elder abuse. A loss of assets resulting from poor financial caregiving or financial elder abuse has a ripple effect that touches many people in a client’s network, including their financial advisor. Due diligence in all aspects of a client’s financial situation can go a long way toward preventing a crisis.