Our compliance team is a group of highly experienced professionals with years of experience supporting advisors, their staff and clients. As a Network advisor, your compliance supervisor is a one-stop resource to help keep your business in line with regulatory protocol and to avoid career-ending risks. We hope by sharing some advisors’ experiences, you will be better equipped to avoid risk in your office.

The following scenario is real, but the names have been changed to protect the anonymity of the parties involved.

A client’s stepson called an advisor’s office to inform them his father had had a heart attack. The stepson claimed to have power of attorney (POA) and to be a trustee of his parents’ trust. Knowing the requirements, the office requested copies of official documents to confirm the stepson’s claims.

At first, the stepson did not provide the documents but proceeded to request information on the accounts. The staff reminded him of their inability to share account information without the appropriate paperwork on file. The stepson acquiesced and sent the staff the POA, trust documents and a signed sharing agreement form. The staff submitted the records to the broker-dealer and were informed that to remove the father as a trustee on the account, they must also submit a letter of incapacitation from a doctor.

The stepson became upset when he was unable to gain authority over his father’s accounts without the letter of incapacitation, and pushed back. The advisor’s staff explained to him the process of adding a trusted contact: If they’re unable to get ahold of the client, they can reach out to the trusted contact, but they still cannot disclose any account information without the appropriate documentation. He was reminded that the supplemental forms were still required before the account could be adjusted.

The stepson threatened to liquidate the accounts and became abrupt and rude to the advisor’s staff, claiming the process sounded like a scam. He insisted that both of his parents had dementia and if the staff contacted his father, they could trigger panic attacks. 

At this point, the advisor was understandably concerned. He called the client directly to check on his health and substantiate the stepson’s requests. When they connected, the advisor told the client he wanted to help to alleviate his stress, but unless the appropriate paperwork was on file, he would need to continue to include him in any actions regarding his accounts.

The client asked if his stepson could liquidate all the accounts, and the advisor confirmed that his stepson could liquidate them if he were to gain control. The client was surprised and said he did not want that to happen; he also did not want his accounts transferred from the advisor from the broker-dealer. The advisor scheduled an appointment with the client and told him he could invite his stepson to attend if he wanted so they could all be on the same page.

Given these red flags—the stepson putting himself in the middle of the client relationship while trying to prevent anyone from speaking with the client directly—the advisor requested that the broker-dealer freeze the accounts. The issue was escalated to the broker-dealer’s legal team, which worked directly with the client to determine next steps.

An otherwise disastrous event was avoided, thanks to a staff that stuck to protocol and an advisor knowing when to escalate red flags.

This case study is for informational and educational purposes only. Please understand that no situations or experiences are exactly alike. Case studies are not to be construed as an endorsement or testimonial of any of its past or current clients or advisors, nor any assurance that we may be able to help anyone achieve the same or similar results. Past performance is no guarantee of future results.