Outside-IN

Outside-INblog

Outside voices and views for advisers

Help protect clients from scam attacks

If we continually educate our clients, we can help them become more aware

Mar 7, 2017 @ 2:20 pm

By Sheryl Rowling

The Securities and Exchange Commission is holding advisers to higher standards of care related to cybersecurity. Yet, while we put more and more protections in place, our clients are facing ever increasing scam attacks, whether through the internet or by phone.

Although it is not in our official job description to protect clients from personal fraud assaults, as a trusted adviser, we should do our best to keep them informed. In my firm, we often include scam warnings in communications to clients. Unfortunately, in spite of this, we occasionally find that a client has become a victim.

There's a few recent scams that we've seen and heard about from our clients. The first example is an old scheme; apparently still out there.

(More: Most financial fraud victims share specific character traits)

Yesterday, a client stopped by the office to inquire as to whether he would be entitled to a tax deduction for fraud. Regrettably, the client fell for the "grandparent fraud." He received a phone call from an "out-of-town sheriff" stating that his grandson had been arrested for intoxication. Because the sheriff confiscated his cell phone and the grandson didn't want his parents to know, he gave them my client's contact information. In order to bail the grandson out, my client would need to wire money immediately. As a loving grandparent, he did.

What my client should have done is call his grandson. The grandson would have answered his cell phone and the scam would have been thwarted.

Another fraud is aimed at successful working people. The scammer will email the target from what appears to be the head of the employee's company. The email says that because the head trusts the employee, he/she is asking the employee to contact their attorney immediately — and the attorney will explain everything. When the employee calls the number, the "attorney" states a plausible reason why the employee has to advance funds on behalf of the company, which will be reimbursed within a couple of weeks. As a loyal employee, the target often agrees to wire money.

What the employee should do is call the head of the company. Thus, the swindle would be prevented.

(More: Even capable seniors vulnerable to fraud, research finds)

No matter how old the scam, they seem to never go away. All the criminals need is one or two suckers to believe the ploy. Current schemes still include fake IRS email notices and PayPal/credit card billing update inquiries.

We can't singlehandedly eliminate financial fraud. However, if we continually educate our clients, we can help them become more aware.

Sheryl Rowling is head of rebalancing solutions at Morningstar Inc. and principal at Rowling & Associates. She considers herself a non-techie user of technology.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Ric Edelman: 3 factors transforming the financial advisory industry

We are at the "knee in the curve" of a transformation of the financial advice industry, according to Ric Edelman. But what's next and how will it shape your practice of the future?

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Why private equity wants a piece of the RIA market

Several factors, including consolidation in the independent advice industry and PE's own growing mountain of cash, are fueling the zeal to invest.

Finra bars former UBS rep for private securities transactions

Regulator says Kenneth Tyrrell engaged in undisclosed trades worth $13 million.

Stripped of fat commissions, nontraded REIT sales tank

The "income, diversify and interest rate" pitch was never the main draw for brokers.

Morgan Stanley fires former Congressman Harold Ford for misconduct

Allegations against the wirehouse's former managing director include sexual harassment, which Ford denies.

Senate tax bill changes for pass-throughs more generous than House version, experts say

Senate measure's handling of such small-business income is simpler and makes allowances for more service companies.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print