Championing Financial Empowerment

Rabobank’s Sonika Singh with Financial Advisor, Greg Cunningham.

Throughout history, financial conflict has underpinned storylines from empiric downfall through to Hollywood blockbusters.

Yet in everyday life, financial abuse is far more subtle, and financial advisor Greg Cunningham warns it’s prudent to be aware in situations where vulnerability can lead to being taken advantage of.

“Identifying and addressing financial abuse is not always straightforward, and unfortunately financial exploitation is more often than not at the hands of a loved one, which adds to the complexity,” Greg explains.

Empowering the elderly in financial discussions

Financial abuse disproportionately affects society’s most vulnerable groups, typically the elderly, women, individuals with disabilities, and those from diverse cultural backgrounds.

Financial abuse against the elderly, he believes, is particularly nuanced, and often highly emotive.

“There’s a fine line between an older person being of diminished capacity, or simply old – and this is where things get murky,” Greg explains.

“When children are given Power of Attorney to discuss their parents finances I’m always hesitant as it’s my point of view that elderly clients should always be a part of the conversation, unless they are incapacitated.”

For older people, Greg suggests that while children can help guide the process, they themselves should always be a part of the conversation and in the room whenever their finances are discussed.

“If older people have questions I always encourage them to speak up, and when I’m talking to clients, I always make sure I address questions to the mum and or dad, not their children.”

He said instances of children withholding grandchildren access, or their own attention, to elderly parents in response to financial access were examples of financial abuse, with emotional blackmail sadly not an uncommon consequence.

“If you’re an older person and you have the capacity, always make sure you have some degree of understanding when someone is making decisions on your behalf, and don’t be afraid to speak up.” 

Full transparency can reduce female financial abuse

In his experience, some women also tended to be more vulnerable when it came to financial arrangements, and Greg says it’s important that couples are up-front about their finances.

 “When a couple has a joint investment or bank account with signing instruction for one signatory it may make it easy to transact, however it means one person can make decisions to the detriment of the other.”
 

Greg Cunningham of Cunningham Financial Services

For this reason, Greg believes it’s important to communicate clearly what and why a transaction is taking place.

How accounts are named for tax implications, and your individual legal access to money, or debt, are all important conversations, and having a clear outline of the structures in place – and consequences – is important for all women, he reiterates.

Another subtle form of financial abuse between a couple is through mis-profiling.

“In some instances a couple may not have the same appetite for risk, and perhaps one partner is more vocal about putting all their money in one investment, whist the other half is quietly uncomfortable,” Greg explains.

“An inability to speak up on financial matters that impact you is another subtle form of abuse.”

Greg acknowledges that a good financial advisor will know when to draw the line during discussions, and that, most importantly, couples should have an opportunity to draw cash individually.

“I think it’s part of a healthy relationship to talk about what happens if things don’t turn out as expected and while there are legitimate reasons for intertwined finances, everyone should have a contingency plan in case they’re acting solo.”

“I encourage my wife to have a ‘run away’ account all the time”, Greg smiles, “hopefully she never has to use it, but an option like this can be of great comfort to some women.”

A fresh set of eyes to help prevent financial abuse

Greg, as a self-licensed financial adviser undertaking his PhD in financial planning, recently presented at the Financial Advice Association Australia Roadshow, sharing how financial advisers, as trusted professionals, can play a critical role in identifying and addressing financial abuse.

He believes an impartial set of eyes is the main benefit of engaging a financial adviser to help mitigate financial abuse, and to help support intergenerational wealth transfer.

“My role as a financial advisor has a practical benefit, in that I take on the role of the ‘bad guy’ – in the case of a potential family breakdown, I can say ‘no’ to a child on behalf of their parent and avoid a confrontation.”

Greg says when looking for a financial planner to help avoid financial abuse, always look for someone with the relevant qualifications, and a member of industry associations such as FAAA, and a referral from someone you know and trust is always the best endorsement.

Rabobank also ensures staff are well trained and supported to manage clients at risk, with a range of resources on our website to help clients during times of vulnerability, including https://www.rabobank.com.au/support-for-clients and https://www.rabobank.com.au/support-for-clients/family-and-domestic-violence