What you can do to protect elderly clients

Safeguarding senior clients from abuse is possible with a few practical considerations

What you can do to protect elderly clients

As Canadians enjoy longer life expectancies, they also face a more complicated financial road ahead. That includes pitfalls like potentially outliving their wealth, uncertainties around estate planning, and an increased need to plan around health emergencies.

As if that weren’t enough, elderly investors and clients are also in danger of financial abuse. Regulators and industry groups are already working on solutions to the problem. There’s the Seniors Strategy unveiled by the Ontario Securities Commission (OSC) last year, as well as its continued emphasis of seniors in its latest draft statement of priorities. The Investment Funds Institute of Canada (IFIC) also has a Vulnerable Investors Resource Centre to help advisors protect the financial well-being of aging investors.

A good advisory firm should also have basic precautions in place, such as names and contact data for trusted persons. Beyond that, they can adopt more practical solutions, as a recent article in Forbes recommended.  

A common piece of financial wisdom tells people to not put their eggs in one basket. But according to estate planning attorney Martin Shenkman, that advice doesn’t necessarily apply to the nest egg of an elderly retiree. “Many people have many accounts scattered at many institutions … It exponentially increases the number of advisers and accounts to address making identification of an issue more difficult,” he wrote. To prevent elder abuse, he said it may be safer to consolidate accounts at one or two institutions and cultivate deep relationships with the advisor or advisors who are in charge of the money.

Another practical suggestion is to have a real financial plan that lays out a realistic budget completed by the financial advisor. With that plan as a reference for comparison, transactions that aren’t obviously suspicious — relatives repeatedly taking an aging family member to withdraw money from an ATM, for example — can be examined to determine possible abuse.

A client’s cognitive decline also creates potentially massive problems. With that in mind, it may also be helpful to remove discretion from the picture by automating all the financial transactions that can be automated. Shenkman recommended centralizing bill payments electronically into a single credit-card account, which is automatically paid from a checking account that is itself funded with automatic deposits. Not only can it reduce the volume of records that arrive by mail — less information for bad actors to abuse — but it also frees up time and attention for more high-level financial oversight.

“Automate accounting records on a computer program, e.g. Quicken, so that a CPA or other independent or trusted person can monitor activity remotely,” he continued. “Consider if feasible having an independent firm, e.g. a CPA firm, handle bill payment. That provides a check and balance and independent oversight.”

Powers of attorney are a common wealth-planning tool to establish agents to make decisions for those who are incapable of doing so themselves, but Shenkman suggests the use of a revocable trust. “Powers of attorney often have one person named agent to act on your behalf,” he explained. “That can foster financial abuse if the agent is the person who turns out to be the bad actor. A revocable trust can offer a number of safeguards.”


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