The cost of fraud is expensive with attorney fees, settlement costs, revocation of your license(s) and not covered by your errors and omissions insurance. We’re not psychologists, but we are financial counselors. We’re not mind readers, but all know how to do a thorough client interview. We’re not pastors nor rabbis, but if you’ve in this business long enough, you’ve acquired the discernment to know what matters of the heart are important and the mental faculties of your client.
The greatest example of client competency determination is dealing with seniors age 62 and older. So many significant decisions are made between age 62 and 72. From Social Security, Medicare and Required Minimum Distributions, the decade of life-determining decisions can be fraught with peril for seniors as well as their advisers. So, it’s really important to assess the mental awareness of seniors and their decision-making abilities.
One last and chilling thought: Seniors who have experienced poor counsel from their adviser or has been steered to purchase an unsuitable product rarely lose in arbitration or in a criminal lawsuit. It’s always a good to have others in the meeting to confirm client competency and product suitability.