FINRA | By: Pete Chandler | GPE – October 03, 2017:
Pressure tactics and sound investing rarely, if ever, go hand in hand. This holds true when it comes to pressure to sign legal documents that give someone else the authority to make financial decisions on your behalf, such as a Power of Attorney, or POA.
Originally published September 28, 2017: A POA can be important—even essential—to managing your financial affairs in the event you unexpectedly become unable to manage things on your own.
While it’s hard to imagine that there could come a time when you won’t be able to make important financial decisions on your own, there is a chance that day will come.
For example, a health issue might land you in a hospital or rehabilitation center for a lengthy period, or you could become mentally incapacitated. And planning for the future with a POA could minimize complications to achieving your financial goals.
A financial power of attorney is a document that empowers someone of your choosing to handle your financial matter—such as paying your bills, managing your investment accounts, or selling your property—if you are unable to do so on your own.
You, the “principal,” choose an “agent” to step in and act on your behalf. You specify which powers you want your agent to have. The agent has a fiduciary responsibility to act in your best interests, and you generally have the right to revoke your power of attorney at any time.
However, as with the buying and selling investments, you want to make your POA decision in an environment free from pressure. In fact, pressure—whether to invest in a product or to sign a document you don’t feel entirely comfortable signing—is considered a red flag of fraud.
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