Madoff And Stanford Cases Are Not The Only Kinds Of Fraud Advisors May Run Across: Existing Clients May Have Hidden Landmines, Especially During Divorce

Friday, July 27, 2012 07:54
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Madoff And Stanford Cases Are Not The Only Kinds Of Fraud Advisors May Run Across: Existing Clients May Have Hidden Landmines, Especially During Divorce

Tags: client communications | client feedback | divorce | fraud

The fraudulent stories that hit the media—Madoff, Stanford, and others—are not the only fraud advisors are having to deal with in working with clients. Messy divorces can contain hidden land mines and advisors dealing with clients who seemed to have happy marriages may find an entirely different scenario during a divorce.

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Spouses may try to hide assets from each other and make untrue statements regarding property they own as well as the value of that property. Obtaining a credit report is one way advisors can detect such fraud.
 
Even if there is no out and out fraud involved, the change in relationship between two formerly married clients can be difficult to deal with. Two clients who now despise each other may expect the advisor to divulge information about each other’s assets.
 
Inheritances also can create sticky situations. Clients who are executors of a will have been known to move money from other accounts into their own, without disclosing any of that to other inheritors. Advisors may be implicated and litigated by other family members.
 
Secrecy between spouses may exist even if there are no divorce proceedings. A wife may tell an advisor during the financial planning process that her husband will not provide the needed information for the planning process. They may look to the advisor to help gather that information, which puts the advisor in a precarious position.
 
Some couples keep their financial information private from each other and, in such cases, it may not be wise to work with both spouses. Especially when developing new business, it’s a good idea to keep watch for statements that may indicate an alternative agenda by a client. Checking into such statements is a good way to steer clear of unwanted and unexpected situations.

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