The Massachusetts Securities Division, which oversees midsize and small advisors in Massachusetts, has asked advisors to put a policy in place for Trusted Contact for Diminished Capacity. This resulted from numerous cases investigated by the state where a person experiencing diminished capacity was the victim of fraud, often involving large withdrawals from investment accounts and paid to new acquaintances. The Securities Division asks all advisors to have a policy and a set of practices to address this fraud concern.
The main element is a Trusted Contact—usually a family member the advisor can talk to if fraud is suspected.
Here’s an example of how it could work: an advisor receives a call from a client asking for an unusual and large cash withdrawal, saying he met someone recently who is in trouble and needed help. If that client had designated a Trusted Contact, let’s say his daughter, the advisor could contact his daughter to say that it would be helpful to have a conversation about the requested withdrawal.
If you would like to learn more and possibly designate a Trusted Contact, please review this document. Please contact Alan Dossett 508-488-6577 with any questions.