Finra Deadline Looming, Advisors Must Combat Theft From Older Clients

“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.