Protecting Senior and Vulnerable Investors

Submitted by Marc.Jones on May 2, 2019

CAYLA CULVER: Good afternoon, everyone. This is Cayla Culver with Advisor Services. I appreciate all of you joining us today and taking the time to discuss protecting senior and vulnerable investors. 

Over the last year, there have been many regulatory changes related to this topic, and Schwab has been working to create materials and a team to support you and your clients as you navigate these changes. 

Today, I'm joined by Carolyn Rosenblatt and Dr. Mikol Davis, Founders of Carolyn is an elder law attorney and a registered nurse, and Dr. Davis is a geriatric psychologist. Both are authors and have done extensive work in the senior area. Today, they're going to cover recent changes in the regulatory environment related to senior investors and give guidance on spotting red flags and the actions that you as an advisor need to take. Please keep in mind this is an educational webcast, so answers will be general in nature and should not be considered advice for a specific client issue.

With that, I'm going to go ahead and turn it over to Carolyn.

CAROLYN ROSENBLATT: Welcome. We have a very fast-moving presentation today to help you handle your aging clients with greater ease. We have the expertise in aging issues that you need. We're here because many people are living longer than at any time in our history, and age alone makes people vulnerable. 


MIKOL DAVIS: Yes. Thank you, Carolyn. I'm Dr. Mikol Davis. I am a clinical psychologist and have specialized in the last 10 years in geriatrics. I am very, very committed and very passionate about, in our later careers, doing something about stopping financial elder abuse, and that's part of why Carolyn and I founded And we really appreciate your tuning in today, and we hope that you're going to find some very helpful practical tips that you can use to both protect your aging clients and also to protect yourselves. Carolyn?

CAROLYN: All right. I'm Carolyn. I have a nursing background, as you can see, also a litigation background. I worked as a homecare nurse, I've made thousands of visits to people who are caring for aging loved ones at home, so I've been in the trenches, so to speak. And, also, as a plaintiff's lawyer, I understand what makes people want to sue you. So we have put those two things together and Dr. Davis's expertise to bring you this presentation. And just by background… and I also want to apologize for our scratchy voices. We have matching husband-and-wife colds. 

The background was that we had a long-standing broker-dealer who lost us as clients when we started asking questions about things like Social Security, what would happen if one of us had diminished capacity, and he couldn't answer any of those questions. So we found someone who could. That happens to be a RIA, and we're very glad we did make that change. So we don't want you to be the person who gets fired when age-related questions come up for your clients. This need for information is why we're here and why we want to provide education and training for financial advisors.

MIKOL: Quite unique to what we're speaking about today is that we are your demographic.

CAROLYN: Sure, over 65.

MIKOL: We're it. We're it. So let's talk about what we're going to cover today, Carolyn.

CAROLYN: All right. Well, we've got four general things, elder abuse among them, and we will focus some attention on that, along with how you gear up for being ready if you see it. We want you to be able to spot trouble signs and know what to do when you see them, that's very important, because just getting information about all this stuff isn't so great if you don't have an action plan. So hopefully you will understand your role and the regulations concerning elder abuse better when we're done.

MIKOL: So is this a big problem for you, the fact that we've got this large aging population? Well, we think it is.

CAROLYN: Right, and, you know, depending on how long you've been in the business, you may not have a lot of older clients in your book right now, but you're very likely to see more of them in the near future. Financial advisors are seeking new ways to differentiate themselves by adding value to clients. Well, here's an area where you can do that.

Forward-looking advisors can do this by expanding their capacity to focus on their aging clients' concerns, while anticipating their future needs, and that includes needs to the end of life, not just the la-la-la, what a nice time you're going to have in the first part of your retirement. This is a core competitive proposition you can offer in your own promotion of what you're doing.

MIKOL: All right. Well, aging clients do have quite specific or particular risks as clients, and let's talk about what those are.

CAROLYN: Right. Well, you might hear people telling you they want to live to be 100, your client says, 'Oh, yes, I should plan on living to be 100.' And whatever formula you're using might even include that. But, ironically, you might find that they don't want to talk about aging at all. We are fearful of aging in our society, and we often shun facing it because it's portrayed so negatively so often. But it's your job to get real about aging with your clients, so you can offer them the best protection and safety in their aging that's available for them.

And what about all these Baby Boomers, Mikol?

MIKOL: I know, these statistics are quite alarming. Let's look at these statistics. With so many Boomers now reaching age 65… gee, it was only then 60s that I remember… you know, this is a dramatic rise in the number of impaired clients that are going to be surfacing that's got to be treated quite differently in book of business. It's not prudent for an advisor to just think that you're going to be able to treat all your clients the same way. You just can't do business as usual. And so you've got to come and develop the very specific policies and procedures around how you're going to be treating these older clients that you have as they get through retirement, and how to help them navigate some of those challenges in retirement. And one of the things that people don't want to focus on… they do want to focus on not running out of their money, but they definitely don't want to talk about 'What happens if I lose the ability to be able to make financial decisions?' 

CAROLYN: Right. And that leads us to the question of dementia. Now, I think most of us have had some experience knowing someone or having a family member who had dementia, but the actual numbers that the government has collected that tell us that 5-1/2 million people are diagnosed with Alzheimer's Disease in this country, with 5.3 million of that number 65 and older. So you can see where the focus needs to be with your work. Aging clients are not going to stay the same for life. They're drawdown from the portfolio might be planned on being at a certain level for life, but they're not going to be the same. So you need to be aware of this huge problem that will affect some of your clients. It will require you to make decisions about their loss of capacity for safely managing their finances. 

There are probably millions more than the 5-1/2 million who have symptoms of Alzheimer's Disease who have not yet been formerly diagnosed. We hear that all the time. 'Well, my mother has dementia, but nobody has ever actually told her that.' But everybody living with this problem. These people are at particular risk for making bad decisions about money and about lots of other things in their lives.

MIKOL: All right, let's look at some terminology right now, because you hear a lot of these terms being thrown around—dementia or Alzheimer's Disease are the terms that we've been using, diminished capacity. Let's talk about specifically what we mean by using these terms.

CAROLYN: All right. Well, let's talk about Alzheimer's Disease, in particular. It is a progressive brain disease that destroys a person's ability to remember, think and analyze, among other things. When I say progressive that means it always gets worse. It's the sixth leading cause of death in the United States. It's a fatal illness. Diminished capacity is a loss of brain function that typically precedes development of Alzheimer's Disease or other forms of dementia. And when we say dementia, it is actually a symptom of Alzheimer's Disease, but the terms Alzheimer's and dementia are often used interchangeably. So a person with dementia has diminished capacity for handing finances and making financial decisions.

MIKOL: All right, let's look at some of the challenges that are now before us with dealing with longevity in our society, and the fact that one of the bad news here is that some of us, as we age, are going to experience some degree of loss of our capacity. All right, so let's talk about this, Carolyn.

CAROLYN: All right. Well, retirement planning tends to be based on formulas, what the average 65-year-old is going to need in retirement, what the average 65-year-old couple can expect to spend on out-of-pocket medical expenses? What you need to anticipate is that every aging client is at risk for loss of capacity. This means you need to change the way you do business with retirement-age clients to anticipate that risk. Some of them will eventually be impaired or they're partially impaired now. The average advisor has about seven clients who have some form of diminished capacity at this time. You may not be able to see it yet, or maybe you do, but that is a number that's pretty universally accepted through research in your industry. 

MIKOL: Let's focus on that for a second. So right now we're saying that, and it's quite likely, that all of you have and could identify at least seven of your clients that you have some worry or concerns about their ability to continue to make financial decisions. And our question is, and what are you doing about it?

CAROLYN: Do you have a plan?

MIKOL: All right, so part of what we're going to try to do during this segment is to help you in being able to better spot diminished capacity, so that instead of it being your problem, it's a challenge and it's something that you are attending to and educating yourself about. 

CAROLYN: And I think it's one of the most frequently-asked questions that we get, 'What am I supposed to be looking for?' All right. Well, we're going to give you some tools to help you identify specifics in that regard, but remember that a person with diminished capacity is impaired, their financial judgment is impaired… that's definite… and they shouldn't be giving permission for transactions because they don't know the consequences. They shouldn't be deciding whether to buy or sell anything, or acting independently decisions that you may need the client to make. And this is where the concept of a trusted other becomes essential to support decision-making for any client with diminished capacity. Now, you know the regulators encourage you to try to get a trusted contact in every client file. We think that is not enough to actually make this happen. You need to insist on it and to get more than one trusted contact, and we're going to explain why that is.

MIKOL: All right, so we've broken down 10 flags that we call them, 10 flags of diminished capacity, into four individual categories. And the categories are cognitive, behavioral… I'm sorry, emotional… behavioral, and also financial abuse. And we think that any of your clients who have already witnessed and been a part of being abused financially, it is likely that they already are demonstrating that there are some issues that they had about their financial capacity.

CAROLYN: Right, and you need a uniform way to track and document these danger signs. We've got a checklist to help you. It's here in the slides, it's also on our website, which you can download for free at The 10 red flags should be described in a uniform way by everyone in your office or organization. So let's get through the 10 red flags.

Now, you can see from the first five that the person has some problems understanding what you're saying. Maybe you've made a decision with them at an earlier time that when this or that matures they're going to sell it, or they're going to shift a certain percentage into something more reliable for returns, but they don't get it anymore. And maybe they want to do something bizarre-sounding that's inconsistent with what's always been their philosophy of investment, or maybe they're acting differently one day to the next, and you just are surprised by that. Your client may show some of these things at the same time, or, if the impairment is great, maybe they're showing you all of them. The idea is that these are markers, these are warnings, and you need to be observant of them in your office or your firm. Your policy about aging clients should acknowledge a trigger point. That is, how many of these is it going to take before you contact a trusted other, escalate the matter in your office's standard protocols, or meet with the designated persons in your office to help you decide what's next? The main point is that you never ignore or dismiss these as unimportant or you're going to wait until it gets worse. It's already worse. If you're in conversation with your client and you see any of these items repeatably, that gives you the pattern we're talking about. This is like watching a trend line and any investments you have for the client. You're trained to see when things don't look like they're going right and it's time to get out. For your client's behavior and emotions, it's somewhat the same kind of exercise. You're taking a skill you already present and putting it to work in connecting the dots in what your client is showing you. Documentation is critical here because that helps you track this. This could take place over a couple of years. So if you have a record it's much easier to see, 'Oh, gosh, a year ago they were demonstrating that they couldn't keep track of what I was saying. Now it seems to be much worse. Okay, maybe we've reached that threshold where we have to get a trusted contact involved here.'

So these are the other half of the checklist. Sometimes people get very paranoid. 'Somebody's taking my money.' 'How come the money isn't as much as you said last time.' They start getting accusatory. These are among the warning signs. And if they get lost, if you find that they're wandering around in your hallway and they can't find their way to the car, or maybe their appearance has changed, they forgot to comb their hair… I had a guy come into my office at one point with diminished capacity. He had not only his hair uncombed, but his pants were unzipped, and he had food stains on the front. He had been a professor. You know, this was not how he would normally look. Okay, so those are the red flags.

MIKOL: All right. So let's talk about the more important thing, about what are the action steps that we are suggesting that they need to take when they see these red flags? 

CAROLYN: Right. Well, first you have to spot them. We've been through that. Then you've got to document them. We've been through that. If everybody is using the same language, no matter who's reviewing what you're doing with the client, they're going to see consistency in the way you have written this down in your computer, or wherever you're keeping notes.

MIKOL: When is the best time to document it?

CAROLYN: I think as soon as you've had a meeting with the client for portfolio review or for any other reason, or you've had a phone conversation that's disturbing to you, they've asked you the same question that same day, three or four times, that's a good point to make that notation in the file. And then, again, when you've reached a certain number… let's just say three of these warning signs that you have documented… that's where you need to have a policy about escalation to the next level of review. And that means having somebody else, somebody knowledgeable in aging issues in your organization, or that you can reach out to, to look at your documentation and help you decide if it's time to call in the trusted third party to help with financial decisions. This is crucial; this is how you protect yourself; this is how you protect the client. 

MIKOL: All right. So let's talk about the choices in managing a client who is showing these warning signs.

CAROLYN: Right. So I want to start with the one at the bottom…

MIKOL: Okay.

CAROLYN: …because this is what people are doing too much, this is what we're seeing because…

MIKOL: You mean denial?

CAROLYN: Maybe. Do nothing is not on this list, okay?

MIKOL: They'll get better.

CAROLYN: Right. Maybe …

MIKOL: They're just having a bad day.

CAROLYN: Right. Maybe we'll just wait until it gets worse. It's already worse. I'm telling you, it's already worse, if you have these things documented. So you have to have someplace to take this so it's not just your perception or potential misperception of the client. You know, this is not just getting old. Just getting old does not destroy your memory, your judgement, your thinking, your analytical skills. Your IQ remains intact until you die if you're normal. If you have brain disease you're not normal. So you have to have a trained committee with senior-specific skills to confer with you. Presumably, they're going to know more than you do, and this helps create the uniform escalation procedure. Your committee could be one or two people. They review the documentation you have and say, 'Okay, we've reached the trigger point. Now it's time to contact the third party.' Or it isn't, because they just had surgery, or they're depressed and they're getting treatment for it, or whatever. There can be other reasons for some of these warning signs. Third parties have permission, typically a durable power of attorney, or maybe they've become the successor trustee on the family trust in place of Dad. They can make competent decisions about finances. If you have no permission, if you have no third party, and you have an impaired client, you cannot safely continue to serve an incapacitated client by yourself. You have no choice if you have none of these things in place but to get rid of the client. If you keep that client and things go wrong, you are really taking a risk of getting yourself in legal trouble. 

MIKOL: All right. So a person with these red flags probably has the diminished financial capacity issue.

CAROLYN: They can't make competent decisions any longer, because that part of the brain that is affected by dementia severely limits their ability to make judgments and financial decisions at the earliest stages. So you don't say, 'Well, if they've got mild dementia, they're mildly impaired.' No, if they have mild dementia symptoms, they're already significantly impaired financially for decision-making and judgment. If they're in the middle stages of dementia they are severely impaired in their judgment. These don't track evenly, as we say, and there's a lot of research to substantiate that. These folks are vulnerable to manipulation, costly mistakes, and dangerous decisions, and this is where you come in. You're at risk if you allow a person who no longer has the capacity for financial decisions to make those decisions. You could be blamed if things go wrong.

MIKOL: And what a lousy choice to cut a client with diminished capacity loose, knowing how vulnerable they are, because it's just throwing them to the wolves in terms of they're being abused by, often, the people we know that abuses...

CAROLYN: Predators.

MIKOL: …elders, which are family.


MIKOL: And so they're waiting in the wings if that's, in fact, going to happen.

CAROLYN: And if it's not the family it's other predators who are just dying to get to them, because they know what diminished capacity is. So we want you to not lose clients, we want you to be prepared, and that's really the point here.

MIKOL: All right. So here we're talking about the pitfalls that we've been discussing when you have clients with diminished capacity.

CAROLYN: Right. Okay, so you don't want to put yourself at risk. It's not reasonable to just allow a person who probably has dementia to do whatever pops into his or her head. 'Yes, I want to give $1 million to the Prince of Nigeria. He was so nice to me.' Okay? You have to exert some form of control and that is the point of involving a trusted contact to help with decisions. 

For your part, you've got to do what's reasonable in your position as an advisor. This is what the regulators want you to do, they've been issuing white papers about this since 2008 or '09, they've now come up with rules. It's all directed toward the same thing. They want you to take protective action, so they don't lose their wealth.

MIKOL: All right. So let's define from our perspective what we deem financial capacity.

CAROLYN: Right. And you can see it on the slide here, and I think let's focus on the second part. When people start to change a long-standing behavior pattern, it can lead to financial ruin. Doing self-destructive things is not in a person's best interest. Giving a million dollars to somebody they met on the Internet is not in a person's best interest. That can be a strong indicator of loss of financial capacity. If they depart from their normal values and beliefs about their portfolio, you probably do need a surrogate decision-maker involved to protect them and to protect you. 

MIKOL: All right. So let's go a little bit deeper in talking about what the regulators actually want you to do.

CAROLYN: Well, these are some of the new rules, you know. They want you to have programs. Well, how many people have one? If I took a show of hands, there might be nobody. We've done this. They want you to look for the red flags, and we've given you the checklist now, so you have a way to do that. This third-party contacts thing, they're saying you're supposed to try for that. And they let you hold transactions when abuse is suspected. Well, isn't that lovely, that's not going to stop it, trust me. 

It's unfortunate that FINRA and the SEC recommend things, tell you what would be good to do, but don't give you actual guidance on how to do these things. There are baby steps, such as recommending that you try for a trusted contact in every file, but what if that contact is not so trustworthy? Another baby step is requiring that you report financial abuse… and we're going to get into that in a minute… if you suspect it, and they assure you that you're not going to be liable for reporting it. Great. Is reporting it going to stop it? Probably not, in most instances, probably not. So developing your firm's or your office's best practices in this area is very important if you actually want to get somewhere in protecting your client.

MIKOL: So the thing that we've been talking is that clearly every office needs a very specific, senior-specific policy, and we're going to talk about the components of what makes up a senior-specific policy.

CAROLYN: Right. And we've already been through part of that. The policy tells you what red flags to look for and what to do when you see them. We've been through that, and you can just incorporate that, and, voila, that's the beginning of a policy. 

Someone to review your documentation should be part of your policy, also. So you have someone specially trained, they've taken more classes than just this webinar, for example, to help them drill down into some of the more detailed things about diminished capacity, financial decision-making and abuse that anybody at a sophisticated level would want to know. Your policy should require you in your office to have two or three trusted contacts in every client's file, particularly your clients age 65 and up. So what you see we're advocating is you don't just try for one, you insist upon it, okay? You insist upon it with the client, or you have some kind of document that says, 'Okay, we really asked you to do this and you refused, so sign here, you're giving up your ability to come after us if you don't do what we recommend and really want you to do.'

MIKOL: And what's the best time to have them sign this policy?

CAROLYN: I think at retirement, at 65, at any birthday you pick, certainly at age 65 would be a marker. And your policy should provide you a clear way to have your client's permission to contact these third parties, defining the circumstances when you can do so. Is it reaching a threshold of the trigger point, and what sort of documents would you put in that policy that would give you permission to contact these other people?

MIKOL: All right. So we've talked some about the components of this model, senior office policy, and you can see those five points of which we've discussed.

CAROLYN: Right. And I think it's important to look at the fourth one here; people ask us a lot of questions about this. We've actually sat down and experimented and created, with lawyers, a model senior-specific policy, and so it can be done. It has everything in here that we think is necessary. But you also need an alternative document to use with clients who refuse to sign a privacy agreement or refuse to give you those contacts, because that will protect you against the liability of hungry plaintiff lawyers who want to come after you when the client's portfolio gets decimated because they started giving their money away to that scammer on the Internet or the phone. 

So how do you get started with this? You've got to have a steady group or taskforce to do the job. You need to get training. That can be done online. We offer it, and likely others do, as well. You need to get training, beyond just skimming the surface, as we're doing today, of some of these principles. You want to decide on what you're going to do about diminished capacity. Will you have a policy written down that you contact the trusted other after two or three signs, say, of diminished capacity? You want to address that privacy issue with a document, and you want to devise best practices about how to approach your client, a very tricky area. 

MIKOL: All right. Now we're going to talk about the escalation. And what we found over many years is that many of the people that are in compliance departments are clearly not any more qualified in terms of their expertise in dealing with aging clients to know how to be able to manage and deal with these individuals. They often tend to be more background in legal, and they're more concerned about potential lawsuits than helping you have a better idea of how to best deal with those clients.

CAROLYN: Right, and there are a bazillion rules that govern what you do. This piece dealing with aging clients is only part of that. But the research that we've seen about what compliance officers would say to do with a client who seems to have diminished capacity, answers were all over the place. I actually watched a video of a compliance person saying if you have someone with diminished capacity, never tell anyone. That is the worst possible thing to do, the worst possible advice, that's pretending they're not impaired and pretending that you're not at risk. Please, understand that you are at risk if you continue to treat these clients as if they're fine, because they're not.

MIKOL: Well, there are going to be clients that are going to resist, allowing you to bring in those third parties to deal with their financial decisions. They just don't want to have anyone else involved in their business, and they are going to fight tooth and nail to ensure that you understand that you don't have the right to bring those people in. So what is this all about? 

CAROLYN: Well, some people do not know they're impaired, other people are in denial about being impaired, because they're so terrified of loss of control. There is a phenomenon called anosognosia, where the person's part of the brain that's injured, damaged by disease, really prevents them from recognizing their own impairment. They feel fine, and so they don't know, and that makes it very problematic when it comes to denial. And, again, that's why this privacy document and the waiver of responsibility pieces of your policy become so important, because there will be people who will totally resist.

MIKOL: Well, do you have any clients that come to your office and look like this? There's no question that you're going to have clients that are not going to be able to realize and be aware of their own impairment, and we have seen this over and over again. There are many studies that show that people with these actual mild symptoms of dementia continue to feel quite confident about their ability to handle their own financial matters. What is somewhat challenging is that they continue to resist anyone else becoming involved in helping them.

CAROLYN: Oh, they think they're fine, they're so sure they're just fine. And, again, there are no physical symptoms of diminished capacity. It doesn't look like they're haggard or pale and sallow, or, you know, impaired in their walking. That has nothing to do with it. They can be perfectly fine physically, other than their brain, but that sets them up for getting ripped off.

MIKOL: But part of what you see is just the level of stubbornness.

CAROLYN: Yeah, and that's part of the disease, too. 

All right. So there's financial exploitation as an entire category. That's part of the focus here, obviously. That's part of why Schwab wants you to understand this area. This financial exploitation of vulnerable people is really the heart of the matter, and it's defined here. Somebody is doing harm to them and benefitting themselves. Someone is taking advantage of a trusting relationship and misusing their assets. 

So there was a daughter who called once, she was a client, consulting client. She asked me about her very wealthy father, whose caregiver was using undue influence to get him to give her money, and she wanted to know if it was still wrong if her father could afford to lose the money; he was very wealthy. Well, the answer is yes, it's still a crime. We don't define financial exploitation based on whether someone can afford to lose assets. It's defined based on the conduct of the abuser. It is a crime, as well a civil wrong, in most states, although the language of the law varies from state to state.

MIKOL: Well, you're going to have willing victims that are going to allow themselves to be exploited, and they're going to be okay with having it happen, and they're going to resist taking action, legal action, to stop this going on. And we've seen this over and over again when it's often members of the families that are financially exploiting grandma, or dad, or whatever, and when they find out that it's going on, they don't want them to get in trouble.

CAROLYN: Don't get my son in trouble. I remember looking a 93-year-old in the eye and telling her that her son was stealing from her. She said, 'I don't want my son prosecuted.' Also, caregiver abuse, very common problem. They will get the elder to sign a durable power of attorney in exchange for a lot of things. 

MIKOL: Now, we were talking about aspects of this slides a little bit earlier before, which is that when people are having cognitive decline, there's a very high level of confidence that they have in handling their own money. Their judgment is already impaired, but, more importantly, what we see is that they still have the ability to write checks. And so you've got this combo of a high level of confidence, impaired judgment, and still an ability to write these checks. 

CAROLYN: Elder financial abuse has been called the crime of the century, and regulators want to have advisors be more involved in preventing and stopping abuse, so they have some new rules. And I'm going to explain how these are really not going to effectively solve the problem, the $36 billion-a-year problem of what's being stolen from elders in our country.

There are these FINRA regulations, okay? So you're supposed to try to get a trusted contact person. They let you hold transactions for a total of 25 business days if you suspect abuse. And these rules are not going to protect aging persons from abuse, but they are better than no rules. At least you can't get chastised or sued if you make the effort to report these problems. Sometimes the trusted contact is the very person who will rip off the elder—the son, the daughter who doesn't have any money. We recommend getting three trusted contacts, one of whom is not a family member, and they all should be able to talk to each other and report to one another. That helps. Holding transactions for up to 25 business days. This is to reassure you you're not going to worry about getting sued if you don't do what the client tells you at first blush. But unless there's a plan to stop the abuser in 25 days, which is unlikely, this will only delay the abuse. The abuser will be happy to wait 25 days. Trust me, we've seen it happen. So we know that family members are the most frequent abusers of elders. They are usually the ones identified as the trusted contact person. Aim for somebody outside the family—the advisor, the lawyer, the clergy person, the accountant, someone who will be helpful, along with you, to protect your client's interests.

MIKOL: All right. So the fantasy meets reality. The vulnerable elder should not have this authority over their transaction.

CAROLYN: Right, and let's drill down into the cold transaction period, okay, 25 days. What it takes to stop someone who is impaired from acting as the only person in charge of money, maybe they are the trustee on the family trust, the 25 days is not enough to change legal status. That's the truth. In one instance in which we were involved, a dishonest son was taking money from his 93-year-old father in a nursing home. The daughter was the power of attorney but had not exercised it. She had to get her father off the trust that had all the money in it, millions of dollars. She got instruction from us about what to do, which meant going through all the steps of removing Dad from the trust and putting her in his place. It took three full months to do that, and that was with professional instruction. Meanwhile, son ripped off his dad for an additional 50,000 bucks, even though the advisor held the transaction for, I think, at least a month. He delayed and dragged his feet. Didn't stop the abuse, okay? 

MIKOL: Well, what about the new Safe Seniors Act of 2016?

CAROLYN: Right. This requires you to report financial abuse, and protects you from getting sued if you're wrong, if your suspicions are wrong. Great, okay. But it's not going to stop abuse, because reporting it doesn't always get us where we wish it did, okay? So the example I just gave you, neither holding the withdrawal that the son urged his father to make for 50,000 bucks, nor reporting it would have stopped him. The daughter taking over the trust as the new trustee did stop the abuse. And the Safe Seniors Act doesn't suggest anything about how you actually stop abuse, other than reporting it. 

So how do you report it? What do you do? You have several choices. The first one is to contact your local Adult Protective Services. They typically have a hotline open 24/7. The first contact is typically by phone. An intake worker, who is a trained social worker, takes basic information from you and makes a report, something like a police report. The worker may then send you, perhaps by email, a standardized form to fill out, asking for the details. And you have to have the name of the suspected abuser and the relationship to the elder in question. And here's a typical form on the next slide that we have in California, which I think is probably similar, and it looks like a police report. And I know it's hard to read on this slide, but it asks you to identify who the abuser is, and who you are, although you can do this anonymously if you prefer. It's not limited to financial matters, but it covers all kinds of abuse, including self-neglect, physical abuse, psychological abuse. So at the end of the form, if you were filling it out, you would put something like 'depleted financial assets' or something of that nature. You have to name what the abuse is. So 'unlawfully took client assets' would be a thing that would be reported.

MIKOL: So what if your client refuses to give you that trusted contact?

CAROLYN: Okay, now remember, we talked about resistance. This is where, you know, if you had a client for a long time, you've never asked for this, this is a problem. So…

MIKOL: Because now the problem is in your lap.

CAROLYN: That's right. So you want to have that office policy where getting this information is routine. First of all, when you get your new client, or with your existing clients, at portfolio review, you just tell them that this is your office policy, 'This is what we ask of you. This is what we need you to do for your own protection.' And if they refuse you document that, and you have them sign a waiver created by your office, or your compliance people or your legal, that protects you and says, 'We gave you the opportunity and you declined it, it's your choice, and you're not going to hold us responsible.'

All right, also, it's really important that we educate clients. At or near retirement is a good time to start the discussion about the person's responsibility to the family. You know, sometimes they don't get along with family, sometimes they're secretive about money, sometimes they don't want anybody to know what they've got. I'm sure you've run into that. But we have the checklist that you can use with them and just hand this out. We developed this in response to some questions for presentations we gave at local rotaries. So let's go over that checklist.

It's 10 points. All of these do not apply to you. But this, by the way, is downloadable also for free at This could be a start, something to discuss with your client. 

Item 1, that's the trusted contact piece. It says thinking about it, maybe this is the time they're going to share that with you. 

Item 4, also very important. How are the trusted contacts going to get the information to communicate with you about finances? 

And moving on to the last part of the checklist, look at Item 9, okay? Now, again, if there is no durable power of attorney, or that person is no longer available, there has to be somebody in their place and a successor alternative to that person—very important. The attorney is going to know who the successor trustee is, and the money you manage probably, in most cases, is in a trust. So knowing who is to take over that management in the event of loss of capacity by your client is an important part of the picture.

MIKOL: It's also an opportunity for you to take a look at these legal documents, and we encourage you to be able to take a look at that.

CAROLYN: All right. So just summarizing. This is your to-do list, these are things we've gone over. You've got a senior policy, you've got a way to document your red flags. You've got to understand financial abuse is out there, and everyone's at risk. And you want to know the warning signs of financial elder abuse.

All right, so we've got three main takeaway from this. The first is that you want to aim for those two to three trusted contacts in every file. You want to standardize the way you keep record of the warning signs of diminished capacity. You want to have the right documents on hand, and you want to get or create your legally sufficient privacy document. And on our website we have a lot of tools that will help you. There is a blog, there are videos, there are the downloadable checklists, all of which are available to you to help you understand. We also have books. There's one to give your clients called The Family Guide to Aging Parents, that's answers to legal, financial and healthcare questions. And we have two books for you, Succeed with Senior Clients, Hidden Truths about Retirement and Long-Term Care. And these are just for financial advisors, available on our website.

CAYLA: Well, that about brings us to time. Thank you so much, Carolyn and Dr. Davis, and everyone, for taking the time to join us today. So we'll go ahead and end it today, and thank you, everyone, for joining.

CAROLYN: Thank you very much for having us.

MIKOL: Thank you. Bye-bye.

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