Quentara Costa is looking forward to the day that she is enabled legally to put a client’s transaction on hold and contact authorities in the event there’s financial activity that’s suspicious in nature. Currently, a signed authorization to release information allows her to talk with hired professionals and family members of clients over 65 years old showing signs of cognitive decline, but it’s often not enough to stop elder abuse.

“Having the fiduciary authority to oversee and ensure that a client’s family member is acting appropriately and in the best interest of the client is very important for advisors to have in place,” said Quentara, CFP, whose firm is based in North Andover, Mass.

That’s because family dynamics can change over time.

“The person you named 10 years ago to be your power of attorney isn't necessarily the correct fit for today and could be the wrong decision when a person reaches 65 years old,” said Quentara. “In some cases, the senior doesn’t have a trustworthy family member or friend who actually cares, which leaves me nowhere to go with any concerns.” 

Come February 5, financial advisors nationwide who are members of Finra will be required make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account.

The SEC approved the amendment to Finra Rule 4512 called Customer Account Information last year.

“If there's an emergency and we can't get a hold of the client, if we're worried about the client's capacity or we're worried that the client might be subject to potential fraud or exploitation, that's when we'll reach out to the trusted contact,” said John Ellis, principal in the compliance division of Edward Jones.

The Alternate Contact Authorization form currently in use at Edward Jones will be phased out once the Finra Trusted Contact Rule goes into effect.

“At that point, we will ask each new client if they’d like to provide us with a trust contact and we will capture the response in our operating system,” Ellis said. “The client will no longer have anything to sign because no document will be generated.”

Edward Jones has been intentional about the issue since 2014 as a way to protect older adults.

“More and more investors are turning 65 years old than ever before, which creates a demographic wave that's forcing the issue, especially with one out of ten people expecting to be stricken with some kind of dementia over the age of 65,” said Edward Jones principal John Beuerlein, who credits the broker-dealer’s partnership with the Alzheimer’s Association for its head start on the matter.

“Signs that a financial advisor needs to explore adding interested parties on a client's account include decreased ability to add or calculate numbers, inability to discern what’s financially reasonable, forgetting appointments, frequent hospitalizations, minor surgeries, family members trying to isolate the client and double paying bills,” Beuerlein said.

Interested parties receive all statements and correspondence that are sent to the primary account holder while the trusted advisor or trusted contact is included in communication if a transaction appears suspicious. 

“The trusted advisor is typically the dominant sibling, the most trusted child, or the oldest adult daughter in the family,” Beuerlein said. “Interested parties are often other siblings or relatives as well as hired professionals such as an accountant, physician or attorney.”

The difference between a trusted contact and interested party is significant when transactions are suspicious enough to warrant contacting authorities.

“The potential exists for assigning a trusted advisor who may not have the senior’s best interest at heart,” said Beuerlein.

“Whether it’s the interested party or the trusted advisor, the person with the power of attorney has historically had the most power.”

But Finra’s adoption of Financial Exploitation of Specified Adults gives financial advisors a way to maneuver around all designations in cases where fraud against an elderly client is occurring. The new rule also becomes effective on Feb. 5.

“The amount of money that we've saved by detecting some of these signs and contacting authorities has been in excess of $3 million in the first six months of 2017 alone,” Beuerlein said.

New Rule 2165 specifically empowers Finra members to place temporary holds on disbursements of funds or securities from the accounts of customers where there is a reasonable belief of financial exploitation of these customers.

“A rising number of states are giving firms the legal right to withhold transactions even if a trusted advisor or an interested party approves the transaction because we can argue that the senior is being coerced,” Beuerlein said.

The amount of time permitted to freeze an account temporarily varies from state to state.

“In Missouri, we can hold the account 10 days to conduct our own investigation if we report the case to the state agency that oversees and prosecutes elder abuse claims,” said Beuerlein.  

According to Missouri state law where Edward Jones is headquartered, the investment firm can extend a temporary hold under certain circumstances.

“The firm is required to contact everyone that's authorized on that account, including the trusted contact, as well as conduct an internal investigation to determine whether there's reason to continue holding up a disbursement and if so, the firm must reach out to a court to get the hold extended further,” said Ellis.

Although the new Finra rules may absolve financial advisors of some liability, what concerns watchdog groups like Americans Against Abusive Probate Guardianship (AAAPG) is the serious risk of elder abuse and exploitation once a case is turned over to court officials or even state agencies that investigate elder abuse claims such as Adult Protective Services. "We have investigated and documented countless cases from around the country that are posted to our website,” said Dr. Sam Sugar, founder of AAAPG in Florida. “We get new desperate phone calls every day about local and state court officials using their unlimited power to create fraudulent guardianships through illegitimate orders signed by complicit judges to put the elderly and their assets under the control of a court-appointed guardian," Dr. Sugar said.

Once a senior is deemed incapacitated and becomes a ward of any state, he or she loses all rights under the U.S. Constitution and can be placed in a locked memory care facility.

“That’s often how elders are robbed, over medicated, isolated from family and friends and ultimately starved to death and there is no legal recourse under federal or state law to stop it," Dr. Sugar told Financial Advisor magazine.

According to Ellis, Edward Jones’ financial advisors will not be making any decisions to contact authorities alone once a client’s account has been flagged as potentially suspicious.

 “Any time there is a situation where the advisor thinks they might need to reach out to a trusted contact, he or she is charged with discussing it with a supervisor and a supervisor will then authorize whether they can reach out to the trusted contact or not and if petitioning the court is needed to further restrict an account, our compliance and legal department will step in and carry that out in lieu of the financial advisor,” Ellis said.