Banks are struggling with the conflict of how to protect older clients from exploitation while still preserving their privacy, according to Robert G. Rowe of the American Bankers Association.

The traditional solution to this conflict is to have an older person assign a power of attorney, but even that can cause problems for the bank if the power of attorney is the one doing the exploiting, Rowe said.

The issue of how to protect the elderly from financial fraud and exploitation was explored by financial experts, industry representatives and financial advisors at a conference on “Aging, Cognition, and Financial Health: Building a Robust System for Older Americans” in Philadelphia Tuesday and Wednesday. The conference was sponsored by the Consumer Finance Institute and the Federal Reserve Bank of Philadelphia.

“This is an awkward situation that banks are struggling with,” Rowe said. “The banking industry is based on the premise that if you are an adult, you can deal with your finances” and you have a right to your money. But if financial exploitation is involved, banks need ways to protect the victim.

As digital services and web-based banking take over the industry, personal interaction between the bank officer and the customer is disappearing, making detecting fraud more difficult. At the same time, finding the appropriate agency to report suspicions to can be difficult. The laws from state to state vary on which agency people must contact and on the rights and protections that banks have.

There are red flags that bank officers and financial advisors should look for when dealing with older clients, Rowe said. These can include such things as:


  • A new relative or friend accompanying the client to financial meetings.
  • An account that suddenly has bounced checks.
  • A client who cannot be reached on the phone at the same time a caregiver or relative keeps offering excuses.
  • A client who has become overly dependent on a caregiver.

Trying to protect older clients from financial abuse can be a land mine today, but protection is also part of the future of wealth management, according to Paul Tramontozzi, an advisor with KBK Wealth Management and a panelist at the conference.

A new Finra rule goes into effect in mid-February allowing banks and brokers to ask clients to designate a trusted advisor to be contacted if the financial institution suspects the client may be suffering from dementia or may be the victim of fraud.

“The rule is a good first step in protecting clients and the financial institution,” Tramontozzi said. KBK already asks clients to identify a trusted contact. “We need to be planning for potential problems, not reacting to them.”

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