Your Parents’ Investments: Warning Signs Adult Children Should Notice

Families can notice changes and ask questions while respecting a parent’s financial independence.

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The starting point is important: it is your parent’s money. Concern for an aging mother or father does not give an adult child control over their investments. But families can still pay attention. One potential warning sign is an advisor who seems more concerned about what the next generation wants than about the parent’s own objectives. Estate planning may legitimately involve children and other beneficiaries. But the parent’s objectives remain central.

Led by Harold Geller and Matthew W. Taylor, the Sotos Investor Protection Group assists investors in investigating losses involving financial advice, investment products and financial institutions.

Does the Investment Plan Still Fit Your Parent’s Life?

Retirement does not occur in a straight line. Financial needs can change. Later-life care can become expensive. Access to capital may become increasingly important. Questions families may want their parents to consider include:

Does the advisor understand the parent’s current spending needs?
Is adequate money readily accessible?
What happens if care expenses increase?
Does the parent understand the investments?
Has the portfolio become unusually concentrated or speculative?
Do the recommendations match what the parent says they want?

An unusual investment is not proof of wrongdoing. It may, however, justify questions.

Could You Find the Records If Help Became Necessary?

Families often focus on investment performance while overlooking something much more basic.

Could you find everything if your parent suddenly became incapable of managing their affairs?

Respecting a parent’s independence is important. While parents are able to manage their finances, there is value in their maintaining control of accounts, credit cards, insurance policies, payments and important records. The objective is not for children to take control prematurely, but to make it possible to help when assistance becomes necessary.

What Is a Trusted Contact Person?

A trusted contact is different from someone acting under a power of attorney. The trusted contact does not simply acquire authority to manage the investor’s money. Instead, the concept provides another person who may be contacted in appropriate circumstances when there is concern about what is occurring. That distinction matters. Giving another person control over financial assets is very different from identifying someone who can potentially help when concerns arise.

What Changes Should Families Notice?

Aging itself does not make someone incapable of financial decision-making. What can be more useful is noticing changes:

financial decisions that are dramatically out of character;
unexplained withdrawals;
unexpectedly speculative investments;
difficulty explaining new investments;
unusual requests for money;
major changes in who is involved in financial decisions; or
financial products that the parent does not appear to understand.

Any one of these may have an innocent explanation. The point is to ask, not assume.

Read more about Vulnerable investors and life changes.

What If an Older Family Member Has Suffered a Loss?

If an older family member has experienced a significant investment loss, preserve the documents. Account statements, investment forms, correspondence, notes and records of what was discussed can help reconstruct what the advisor knew and what advice was given. The question is not merely whether an investment went down. It is whether the advice was appropriate for this particular investor in their particular circumstances.

For information about our services, see elder financial abuse.

Investor Protection Experience, Backed by Litigation Strength

Harold Geller brings more than 30 years of investor-protection, financial-services and complex-product experience.

Matthew W. Taylor brings complex investment, securities and class action litigation experience, particularly where losses affect many investors or involve several potential defendants.

Frequently Asked Questions

Does concern give an adult child control of a parent’s investments?

The starting point is important: it is your parent’s money. Concern for an aging mother or father does not give an adult child control over their investments.

Does an unusual investment prove wrongdoing?

An unusual investment is not proof of wrongdoing. It may, however, justify questions.

Do changes always mean something improper happened?

Changes such as unexplained withdrawals, unusual requests for money or financial products a parent does not appear to understand may have an innocent explanation. The point is to ask, not assume.