Question

A registered representative is meeting with an elderly client and believes that this individual is evidencing diminished mental capacity. The father has an adult son, to whom he has given a durable power of attorney over the account. Later that day, the son contacts the representative and tells him to cash out the account and send him the money. What should the representative do?

Answer 1

This question is incomplete, here´s the complete question.

A registered representative is meeting with an elderly client and believes that this individual is evidencing diminished mental capacity. The father has an adult son, to whom he has given a durable power of attorney over the account. Later that day, the son contacts the representative and tells him to cash out the account and send him the money. What should the representative do?

A.

Follow the son's instructions because he has a valid power of attorney over the account

B.

Contact the client and get his permission to liquidate the account

C.

Schedule a meeting with the client and son to discuss the situation

D.

Go to the principal with the request and have the principal handle the situation

Answer: D.  Go to the principal with the request and have the principal handle the situation

Explanation:

The SEC and FINRA have set specific policies to avoid investment scams of aging investors with diminished mental capacity. Therefore, investment firms must be trained to recognize diminished mental capacities and possible financial exploitation.

In this example, there´s a chance that the son is acting in the client's best interests, but the possibility of him draining the account calls for the representative to ask the principal to handle the situation.