Who are advisors to protect seniors from?

What’s not understandable is how advisors, whose job to advise clients in respect of investing their money, became the guardians for these clients. There are so many examples of problems that this creates. Here’s one: Mrs. S, who is 87 years old, lost her husband suddenly to a heart attack. She has never even signed a cheque as her late husband took care of all their financial obligations. When her husband passed away, Mrs. S received $1 million in life insurance proceeds; this, combined with her and her late husband’s savings, ensures that she will be financially well taken care of for the rest of her life.

But then enters Mr. X, who is 70 years old. He begins to “court” Mrs. S. Over time, Mrs. S requests that her accounts be transferred into a joint account with Mr. X. In turn, her children are very nervous as they think Mr. X is going to steal their inheritance — and they may in fact be right. They then try to talk to their mother but she will not listen to them, so the children call the advisor and tell him that if they lose their inheritance to Mr. X, they will be suing the advisor after their mother passes away.

So, what’s an advisor to do in such a situation? Call compliance? What compliance will likely tell the advisor is to write to Mrs. S to advise her of the serious implications of moving her money into an joint account with Mr. X, in particular, that regardless of the provisions of her will, the children will not inherit any of this money after she passes. If she insists on these instructions, the advisor will have to consider whether he can continue to work with her given the nature of her children’s threat over his head.

Let’s presume she wants to move forward with this and, as a result, she moves her accounts to another advisor. What will happen when the account is transferred? The new advisor will not have known Mrs. S before, so he will open the joint accounts as instructed and Mrs. S will not be protected. This is especially worrisome because although senior men may be vulnerable, on average, women more frequently outlive their husbands than the other way around. And there are many traditional relationships in which the woman is, indeed, vulnerable and ill-equipped to take care of her finances after her husband dies.

However, It’s quite unfair to make advisors responsible for this vulnerable group of our population’s financial safety. So what do I suggest? First, don’t perpetuate the problem by allowing husbands to keep their wives in the dark. Inform the husband that you are obliged, both by regulation and law, to meet his wife and get to know her to ensure the investments are consistent with her risk tolerance as it’s not just the husband’s risk tolerance that is relevant.

In circumstances in which the husband dies first, make sure you meet with the widow and explain to her that she needs to be careful and protect her money so that she has it for the rest of her life. You also need to ensure she understands what you mean by using examples. In fact, feel free to use the one in this column. You should also find out who the people are who she trusts and keep this updated.

Another thing that you could do is conduct seminars for seniors and make sure that you teach them the most basic issues, including monitoring and protecting their finances. So, although it’s unfair to burden advisors with the task of protecting seniors, who will if you don’t?