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Be proactive to protect client security

Recognizing the signs of fraud against the elderly.

It’s difficult to overstate the importance of preventing a client’s personal and financial data from coming into the possession of cybercriminals. Not only is protecting this information a key component of the advisor/client relationship, but clients are entitled to expect that their data will remain secure at all times. 

However, while online scams make for good headlines, fraud doesn’t always come in electronic form. Plenty of fraudulent activity still occurs using older methods, including phone, letter and in-person scams that target the elderly. Think of the scams frequently profiled in the media: warnings about home renovators, door-to-door salespeople who promise good deals on water heater replacements and even those who seek up-front payment for shoddy driveway repairs and landscaping jobs using pressure tactics.

Seniors are a vulnerable target

Regardless of the type of fraud, the potential for scams isn’t always on an advisor’s radar, nor the client’s. But it needs to be. 

There are now so many types of scams that the Canadian Anti-Fraud Centre features a list of them on its website. Some of them specifically target the elderly, based on the belief that they are a more vulnerable segment of the population because of their advanced age and lack of awareness when it comes to modern fraud techniques used to gain their trust. Here are some examples: 

Utilities (hydro, gas, cable/internet, etc.)

A scammer claims to be an employee of a hydro or utility company. They state that you have an unpaid balance on your bill, or you have requested additional services. You must pay the charges immediately or the company will discontinue service. The scammer may offer a reduction in the charges if the payment is in the form of electronic transfers, prepaid gift cards or cryptocurrency, which are hard for authorities to trace.

Family emergency

Emergency scams prey on an elderly person’s fears that a loved one has been hurt or is in trouble. Scammers can research social media and then claim to be someone you know, such as a grandchild, who tells you they need money immediately for a serious situation, such as having trouble returning from a foreign country or being stranded after a car accident. 

Fake government officials

A scammer claims to be an employee of the Canadian government contacting you to settle a dispute, such as a compromised social insurance number, unpaid taxes or an alleged financial crime. They threaten that if you don’t arrange payment immediately, you’ll be arrested or fined even higher amounts of money.

Warning signs for advisors

Some elderly clients have a significant amount of money, are more likely to have fewer close contacts, are potentially lonelier and are less comfortable with technology than younger people. But how would you know if they are a target for fraud, or are currently being taken advantage of? While you may not know for sure, when individuals show physical signs of a weakened mental capacity, some vigilance for signs of financial exploitation can be justified. Causes for concern include forgetting instructions or asking the same questions more than once, exhibiting difficulty navigating and completing forms, struggling with basic financial concepts, displaying personality and mood changes, and looking and acting uncharacteristically anxious or distressed.

Advisors should also be aware of behavioural signs. These can include sudden requests to shift towards a higher risk profile, a noticeable hesitation to talk about their financial position, unexplained withdrawals and account closures, requests to change asset ownership, beneficiaries, powers of attorney or wills, and failures to respond to repeated attempts to communicate. Many people are embarrassed or reluctant to communicate when they realize they’ve been a target for fraud, and often won’t readily admit it has occurred. 

In any case, speaking directly with the client and not just accepting an email or text instruction (especially when new banking is involved) will enable you to confirm the nature of the transaction. You will also gain an opportunity to ask more questions to get a clearer sense of what is motivating the client’s behaviour.    

Tips to share with clients about how to avoid fraud

 While advisors are keenly aware of the risks associated with a potential breach of data linked to their accounts, clients should know that they are also responsible for safeguarding their own information in a society that is increasingly under threat of scams and misrepresentation. 

During regular meetings and contact sessions, advisors should be proactive and remind clients of steps they can take to brush up their defenses against fraud, including: 

  • Carefully reviewing each financial statement received from service providers to check for unusual transactions or activity associated with their accounts
  • As a best practice, avoiding sharing financial information or passwords with anyone who is not a trusted individual (see sidebar)
  • Contacting their advisor, bank or lawyer with questions if they have any uncertainty about financial holdings
  • Ensuring they fully understand any financial documents they sign and keep copies in their personal files
  • Never feeling pressured about financial decisions. Obtaining independent legal advice before lending money, transferring ownership of property, reviewing their will and power of attorney, and dealing with matters related to caregiver arrangements is perfectly within their rights
  • Notifying trusted individuals in the event they are being pressured by service providers for access to credit card or other personal and financial information

In addition to the various forms of fraud that individuals should be wary of, advisors should routinely review their own defenses from a technology standpoint. Any online device is susceptible to cyberattacks and can potentially put a client’s digital data at risk. However, this risk can be mitigated when protective measures are routinely followed. This graphic contains several tips to help keep your digital data safe. 

The value of a trusted contact person

A trusted contact person (TCP) is someone an advisor can reach out to if they are concerned that an elderly client is being financially exploited or making poor decisions as a result of diminishing mental capacity. (Note that only individuals with securities holdings can formally appoint a TCP.) Although it is not currently a formalized practice within the insurance industry, asking the client to identify a TCP is considered a best practice. 

Advisors are often in the best position to notice changes in financial behaviour. If they suspect a problem, they can share their concerns with the TCP. Therefore, as an advisor, it’s important to keep clients’ TCP contact information current, in the event it becomes necessary. If your clients do not have a TCP or have not provided a name and contact information, encourage them to submit this information. (Read more about the value of a trusted contact person and the information an advisor can share with them.) 

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