Financial advisers are on the frontline when it comes to fighting financial abuse in Australia.
As one adviser told me this week, his most recent example of financial abuse came after analysing the assets and bank statements of his clients in their early 40s.
In this case, the client was denying his partner financial independence by limiting her ability to work, and access to the couple’s bank accounts and financial statements. He also admitted to regularly threatening to withhold money for reasonable living expenses for their children.
In another example, the daughter of a physically able man in his 70s was controlling his every move and even his ability to buy milk by using threatening ultimatums to give her control over his assets and bank accounts.
In my own life I’ve seen financial abuse first hand, and it didn’t come with domestic violence – as sometimes it very often does.
It showed itself through the scrutiny of every food shop, pantry shelf, bank statement and the fights that would unfold if too much was spent on necessary items, that yet were deemed unnecessary. The details are still a bit too hard to discuss here.
Financial advisers are in a unique and challenging position when it comes to spotting financial but also helping victims escape it.
Three simple ways that financial advisers can help clients identify financial abuse and manage it are:
- Educate your client on what financial abuse is
- Show the client how they are being affected by financial abuse, and what it looks like in their financial situation, for example through asset ownership, debts, cash allocation and bank statements
- Identify the resources available to help a client deal with financial abuse, re-establish their financial control and the services available at the major banks
Financial abuse is considered a form of domestic violence, which is a widespread problem in Australia.
The Australian Securities and Investments Commission defines financial abuse as when another person, perhaps your partner, one of your children, another member of your family or a friend, manipulates your decision-making, or controls your access to money or other property without your consent.
In 2017 researchers from RMIT found the lifetime prevalence of financial abuse for women is 15.7 per cent, while for men it’s 7.1 per cent. It’s estimated that more than two million Australians have or will experience economic abuse in their life times.
Financial advisers face difficultly when confronted with financial abuse when two parties of a relationship are clients.
Often it can be a case of how far do you go in educating a client about what they are doing, why it is wrong and how they can change their ways.
Indeed it mightn’t even get that far and the business relationship is untenable.
Where things get even more complicated is where a client needs help escaping a financially abusive relationship.
If this is the case, a financial adviser can help by:
- Assessing the client’s financial situation and identifying the areas of abuse
- Helping the client regain their financial control with basic money and asset management support. Such as the establishment of a private bank account and the building of emergency cash savings.
- Working with lenders that provide support services to help protect victims of domestic and financial abuse.
- Identifying or suggesting legal or other support services that can assist a person in financial abuse cases.
There are many resources available via wealth management groups to help combat this problem. Referring any concerns to the client’s financial institution is a good first step.
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