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Financial Planning > Behavioral Finance

The Advisor's Role in Preventing Abuse

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Noting in a jointly published 2008 report that securities professionals are “on the front lines” to spot possible financial abuse of an older client, NASAA, FINRA and the SEC suggested watching for these red flags:

  • The investor gives a power of attorney to someone who seems inappropriate.

  • There are indications that the investor does not have control over or access to his or her money.

  • The investor’s mailing address has been changed to an unfamiliar and unexplained address.

  • You are unable to speak directly with the investor, despite attempts to do so.

  • The investor appears to be suddenly isolated from friends and family.

  • The investor’s transaction patterns undergo a sudden, unexplained or unusual change.

  • Unexplained disbursements outside of the norm show up in an investor’s account.

  • A new individual suddenly becomes involved in the investor’s financial affairs.

Source: “Protecting Senior Investors: Compliance, Supervisory and Other Practices Used by Financial Services Firms in Serving Senior Investors,” Securities and Exchange Commission’s Office of Compliance Inspections and Examinations, North American Securities Administrators Association, and Financial Industry Regulatory Authority, Sept. 22, 2008