Fidelity Clearing and Custody Launches Program to Help Advisors Protect Aging Clients from Financial Abuse

– New Fidelity® Research Finds Three-Quarters of Financial Advisors Are Working with Clients with Diminished Capacity
– Collaboration with EverSafe Offers Advisors Daily Financial Account Monitoring and Identity Theft Protection for Their Clients

  • Financial Reports
  • Technology
  • Financial Reports
  • Technology
  • Financial Reports
  • Technology
  • Financial Reports
  • Technology
  • Financial Reports
  • Technology

BOSTON – New Fidelity research finds that three-quarters of financial advisors are working with clients with diminished capacity, and one in five advisors has encountered financial abuse of their aging clients.1 With more Americans living longer, advisors and their firms are increasingly confronted with this issue. It’s becoming even more critical for advisors to recognize the signs of diminished capacity and implement plans to mitigate the financial risks for their clients and their firms. According to the Alzheimer’s Association, by 2050, the number of people age 65 and older with Alzheimer’s disease may nearly triple, from 5.1 million to a projected 13.8 million. 2

In response to this growing issue, Fidelity Clearing & Custody, the division of Fidelity Investments® that provides clearing and custody to registered investment advisors (RIAs), retirement recordkeepers, broker-dealer firms, banks and insurance companies, today announced a new program designed to help firms manage the financial issues associated with aging clients. The offering includes a collaboration with EverSafe, a technology firm that provides a daily monitoring service that scans financial accounts and credit reports for suspicious activity and identity theft. Through this collaboration, firms who work with Fidelity will have access to a discounted rate. The program also includes insights and education from Fidelity to help support advisors and help them protect their clients as they age.

"Although no two situations are alike, advisors should be aware of indicators that might signal diminished capacity in their aging clients, including confusion and memory loss," said David Canter, executive vice president, practice management and consulting, Fidelity Clearing & Custody. "Our goal with this offering is to help advisors implement policies and procedures to identify changes in their client's behavior, monitor their financial accounts and mitigate the potential for financial abuse."

Advisors should be responsive to any changes in a client's behavior that appear out of the norm: confusion with simple concepts, repeating instructions or questions, disorientation of time and place, and difficulty performing familiar tasks. For example, if a client arrives several hours late or goes to the wrong office for a meeting that was previously confirmed, or if a client is unable to review or understand standard reports provided.

The costs of missing these signs are high: according to some estimates, seniors lose more than $36 billion each year to elder financial abuse. 3

"I founded EverSafe after my mother was exploited by telemarketers and sold inappropriate products," said Howard Tischler, founder and CEO of EverSafe. "After intervening on behalf of my mother, I quickly learned how widespread the problem of elder fraud is, and decided to do something about it. This service is another tool that advisors can use to help their clients preserve and pass on their wealth. It offers the ability to detect potential financial abuse when it starts, not after the accounts are empty and there’s little chance of recovery. That's something my family learned too late."

In addition to reviewing their clients accounts, there are several steps advisors can consider to help protect aging clients, including:

  1. Discuss the subject of dementia with older clients, even if they currently show no signs of diminished capacity. This will help to establish the procedures you intend to follow, and can include a review of beneficiary designations and power of attorney documents.
  2. Reach out frequently to older clients. Make a point of speaking with them regularly by phone, and at least occasionally in person, to monitor their state of mind, maintain a strong relationship and keep track of their health, financial and family situations. Follow up on phone conversations with letters that recap the discussion and outline any action items.
  3. Develop stronger relationships with your client's family. The National Adult Protective Services Association estimates that family members are the culprits in 90 percent of financial abuse cases.4 An advisor's role is to identify trusted family members and involve them as much as possible so that a client’s future wishes are honored, money management risks are minimized, and any misunderstandings over money are eliminated.
  4. Document and regularly review an Investment Policy Statement (IPS). This can be a central tool to help manage every client relationship, and, if applicable, should be reviewed and reaffirmed annually. With older clients, make sure to provide signed copies of the IPS for their records, and remind them frequently of its existence and goals.
  5. Help older clients stay financially organized. Whether it's creating a set of folders or leveraging an online tool, consider including: full account information; key contacts for tax, legal, and health-related providers; trust and estate documents; latest tax returns; and all financial and income plans.
  6. Be on the lookout for irregular spending patterns. Sadly, many seniors fall victim to being sold inappropriate products and services, which can include recurring credit card charges and services that may not apply to their circumstances; for example, automobile insurance for those who do not drive.

For additional information on how to protect aging clients, download Fidelity's whitepaper Dealing with Diminished Capacity as Clients Age: Ways to Help Mitigate Your Firm's Risk in Serving an Aging Client Base or click here for access to the video.

About Fidelity Investments

Fidelity's goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.2 trillion, including managed assets of $2.1 trillion as of October 31, 2015, we focus on meeting the unique needs of a diverse set of customers: helping more than 24 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with technology solutions to invest their own clients' money. Privately held for nearly 70 years, Fidelity employs 42,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

About EverSafe

EverSafe helps protect a lifetime of hard work and savings by offering a simple, yet sophisticated service to combat financial exploitation of older adults. EverSafe daily monitoring allows seniors, family members and trusted advocates to protect financial accounts, thwart scammers and defeat identity thieves, while preserving independence and privacy. Learn more at: www.eversafe.com.

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