Aug 09, 2019
Financial abuse is more than just theft. Financial abuse is when someone uses an advantage they have over you for their own financial gain by compelling you to part with your money or assets.
A perpetrator of financial abuse may manipulate you because of the relationship you have with them or because they are in a position of trust.
One example of financial abuse is when scammers phone you claiming to represent a charitable cause and request your financial information.
Another common scenario is when a family member or hired caregiver helps themselves to your funds or material assets without your permission. Alternatively, such an individual might coerce you into giving them permission perhaps by making threats.
Someone who lives with you and doesn’t contribute to your shared living expenses may also be taking advantage of you financially.
Lastly, financial abuse also happens when someone pressures you to make a risky investment, make changes to your will or sign financial and legal forms that you don’t understand.
Financial abuse robs you of the right to control your own finances.
How can you avoid the injustice of financial abuse?
Know the signs
If your money or assets seem to mysteriously disappear and you can’t remember or account for the loss, then it’s time to be alert to the possibility of financial abuse. Another sign of abuse is when someone keeps pressuring you to make a financial decision and they aren’t making an effort to help you understand your options.
If you notice such signs, contact your financial adviser or someone you can trust to help you figure out what’s going on.
Protect sensitive documents
Critical financial documents like your will and the title for your home should be kept in one secure location where others won’t be able to access them easily. A locked safe is a good idea. Keep large amounts of cash in the bank or in your safe instead of in a wallet.
Practice smart banking
Never give your financial information over the phone, even if the caller claims to be from a charity. If you feel the slightest doubt about the identity of the caller and can’t confirm who they are, hang up immediately and call someone you can trust to help you verify.
Follow your bank’s instructions for using your cheques and bank card safely. If your card goes missing, inform your bank right away so that they can lock it.
Don’t let strangers into your home
This is especially true if it seems like your unexpected caller is asking for money. Call someone for help in confirming the credentials of strangers who visit you.
Get more clarification before making financial decisions
No one should make financial decisions for you as long as you have the ability to do so yourself. If you don’t fully understand your situation, get another opinion from a professional or a trusted relative to make sure you know what you’re doing with your money.
Have a plan
It’s important to select someone you can trust with your money before something happens to you. If some unexpected accident or disease makes you incapable of managing your finances, at least you’ll already know who can help you. This can be formalised through an Advance Care Directive document. But make sure you talk to your financial adviser before setting this up.
You can also set up direct debits and pre-authorised bill payments to your bank account so that no one ever has to manage your money to pay the bills for you.
Financial planning is always a delicate matter when there’s family involved. But it’s much worse when there’s the threat of financial abuse. With careful planning and good advice, you can have a solid defence against financial abuse.
Written by Ben Calder, Private Client Adviser at Calder Wealth Management.
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