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Posted on October 27, 2020

The skills advisors need to handle suspected financial abuse

Could you confidently recognise a red flag or a warning sign of financial abuse?

Unfortunately, financial abuse is becoming increasingly more visible on a global scale and it does not discriminate. This type of abuse can occur irrespective of someone’s socio-economic status, level of education, race, gender or ethnicity, which is why it’s important advisors are armed with the particular skillset required to handle suspected cases of financial abuse.

My road to specialising in Financial Abuse

A few years ago I began writing a finance book with the intention of exploring people’s relationships with money. I wanted to determine whether it’s our make up or the lessons we learn in childhood (or both) which impact the decisions we make with money later in life.

Of the many people I wanted to interview for my book, Tanya Targett – a lady I was doing my media studies course with – was one of them. Tanya explained how she had walked into a marriage as a savvy media professional. She was an award-winning journalist, had money in the bank, a home and a trust account. Fast forward quite a few years when Tanya left the marriage with her daughter having to stash $20 grocery cards she could find, and later having a stroke and a complete emotional breakdown after crawling away from her marriage. Tanya was a victim of financial abuse.

That interview set me on a path of wanting to understand the intricacies of financial abuse, how prevalent it is within society and the many different forms it can take. As I started this journey, I couldn’t believe I was a financial adviser and had never come across something like this before. After a lot of researching, it was very apparent to me advisers had either experienced financial abuse first hand with a client or a loved one, or they had had no exposure to it at all.

What is the trigger for financial abuse?

Often there isn’t one defining moment or trigger which leads to financial abuse, it’s more of a ‘frog in the pot’ situation. The pressure is turned up slowly over time and quite often it’s a build up of little moments people let go of or try to justify.

Warning signs of financial abuse

Limiting a partners employment options or prohibiting a partner from progressing in their career and being financially compensated for it is a classic red flag of financial abuse. Some partners will actually forbid work, or forbid any kind of study or professional development. My friend Tanya who I interviewed for my book, told me her husband had told her she had to give up the ‘nonsense’ of her successful media career and take a shelf packing job at Woolworths.

Other warning signs are extreme monitoring of purchases. A spouse may demand to see a receipt for every cent their partner spends or will give their partner a controlled allowance to spend. They likely control and monitor all bank accounts as well. Basically, any severe forms of financial control should raise an immediate red flag.

As advisors, one of the first time we ever encounter suspected financial abuse could be in a meeting with a prospect, or even a long-term client. What if one day, your elderly client walks into your office with their adult son who is requesting to have all funds moved to cash and withdrawn. What would you do?

If we look at elder financial abuse, thefts of funds is a big warning sign – whether it’s taking money from the night stand, right up to re-direction of pension payments or large withdrawals from bank accounts. Inheritance impatience is another warning sign, where the mindset of an adult child is “well I’m going to get it anyway, I might as well take it now”.

Action steps advisors can take

First and foremost, make sure you are protected by taking down very thorough file notes. Sometimes, it may be nothing more than a gut feeling but over time, if you’ve built up a lot of gut feelings (and file notes), it could be time to have a conversation with the person or couple in which you suspect financial abuse.

Setting the expectation with couples you work with by explaining you like to work with couples who have a respectful relationship, and perhaps you can explain what a respectful relationship looks like – one where both parties have the opportunity to voice their opinion, to get involved in the decision making and have access to important documents and family accounts.

Getting your licensee involved and working closely with them if you have a case that needs to be referred. Hopefully your licensee has a professional standard team and a procedure in place to handle suspected financial abuse. If they don’t, tell them they need to write one. They should have policies and procedures in place to protect you and your business.

Having a list of people you can call – local shelters, the elder abuse hotline, organisations like WIRE in your local state or territory. While not all of these providers will be able to solve the problem, they will at least be able to point you in the right direction.

It’s not easy calling out financial abuse

It takes a very brave person to call out suspected financial abuse. If you do have a hunch something is going on, know you don’t have to deal with it all on your own. Get the right people involved to support both you and the victim of suspected abuse.

I believe it’s also very important to make sure you entire team is on board, or at least made aware of the warning signs of financial abuse. Your team are often your frontline staff. Making sure they have the confidence to speak up if they suspect untoward activity (an adult child popping by reception with a withdrawal form for their parent/your client for example) can be the difference between stopping financial abuse, or unknowingly supporting it.

Finally, don’t think this only happens to certain demographics of people. Celebrities, professionals, people who appear to ‘have it all together’ are just as susceptible through a psychologically abusive relationship.

Advisers are in a powerful but also confronting position to not just recognise but to do something about financial abuse. It’s a very delicate topic, but when approached with support and conviction, could save a marriage or could save a life.

– Amanda Cassar

Tagged With: Advice | Advisers | Australia | wealth

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