While financial abuse is becoming more widespread, it is not inevitable. There are steps fiduciaries, trustees, and other professionals can take to help prevent exploitation through a combination of education, structured oversight, and financial tools.

Here are a few actions you can take as a financial professional to help protect your clients from financial fraud.

Education, Oversight, and Verification

Regular conversations about financial safety

Many beneficiaries, especially those with cognitive challenges, may not fully understand the risks they face. Regular conversations about financial safety – covering topics like common scams, red flags for fraud, and the importance of verifying financial requests – can empower beneficiaries to recognize and report suspicious activity.

Two-person approval or periodic financial reviews

In cases where a family member or caregiver is involved in financial decisions, creating checks and balances is crucial. Implementing a two-person approval process for large transactions or requiring periodic financial reviews can provide an additional layer of security. Routine financial reviews are also an effective way to catch irregularities early. Even when there is trust, transparency can help prevent financial mismanagement.

Establish additional verification processes

AI-driven scams, in particular, require added vigilance. With scammers using voice-cloning technology to impersonate family members or officials, you may want to work with your clients to establish additional verification processes. A simple family password system or the habit of verifying requests through a second communication channel (such as calling the person directly or reaching out to you, a financial professional, for guidance before taking action) can help them avoid becoming a victim of these scams.

Tools to Safeguard against Fraud 

One of the most effective safeguards can be implementing controlled access to funds. Instead of allowing unrestricted use of a credit card or large amounts of cash, fiduciaries can utilize settings that limit where and how clients can spend money. For example, the True Link Visa® Prepaid Card allows clients to make purchases on their own while giving card administrators the ability to customize settings that allow approved purchases (e.g. healthcare expenses, utility payments, movie tickets etc.) while preventing transaction types that are more likely to be used by scammers such as telemarketing, wire transfers, large cash withdrawals, or over-the-phone purchases. 

Real-time alerts can be another powerful tool in helping prevent fraud and abuse as well. By setting up notifications (text, email, or mobile app) for unusual or concerning spending activity, such as large purchases or repeat attempts at making a blocked purchase, you may be able to catch suspicious behavior early and intervene before a client suffers significant financial loss.

What to Do if You Suspect Fraud

Despite best efforts, financial abuse can still occur. If you notice signs such as unexplained withdrawals, unusual spending patterns, or a client expressing confusion about their finances, it’s important to act swiftly.

First, assess the situation by reviewing recent transactions and speaking with your client about any concerns. If fraud or unauthorized spending is confirmed, immediate steps should be taken, including freezing accounts if necessary and reporting the fraud to financial institutions or relevant authorities.

For cases involving a family member or caregiver, the response may require more careful navigation, as addressing this type of potential fraud with those close to a client may involve certain relationship tension or sensitive issues. A strategy that involves having clear documentation of transactions that provide irrefutable proof and ensuring that the client’s needs remain the priority can help guide the right course of action. In more extreme cases, involving legal or social service professionals may be necessary to protect a client’s assets and wellbeing.

Partnering with You to Help Prevent Financial Harm

Managing finances on someone else’s behalf goes beyond overseeing bank accounts and submitting annual accounting reports – it’s about protecting their financial security and ensuring they are not vulnerable to exploitation. By staying proactive, using the right financial safeguards, and fostering an environment of financial awareness, fiduciaries can play a valuable role in preventing financial abuse from affecting their clients.

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At True Link, we provide tools that empower fiduciaries, trustees, and professional financial managers to protect their clients with confidence. You can learn more about how our solutions can help safeguard the people you serve here.

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