Protection from Elder Financial Abuse

June 22, 2017

If I could wave a wand and magically put an end to any single non-violent category of crime, I might choose elder financial abuse.

Do you have elderly parents or senior loved ones? Are you over the age of 65? Here are some numbers you need to know. ^[1]

As many as 1 in 5 people over the age of 65 were scammed in 2015
$10 billion (and perhaps as much as $36 billion) was stolen
On average, they lost an astounding $30,000 each
1 in 10 had over $100,000 taken
It’s possible that only 1 in 14 cases even gets reported

As a fiduciary financial advisor for 25 years, these numbers are heartbreaking.

What is EFA?

Elder financial abuse (EFA) is the unauthorized, illegal or improper use of an older person’s money, property, assets or resources. And the odds are excellent that you or someone you know is being targeted right now.

“It’s a massive, underreported epidemic of crime,” said Allworth Financial’s Chief Investment Officer, David Schauer. “There’s usually no way to get the money back, some people aren’t aware they’ve been ripped off—or they’re too embarrassed (or afraid) to report it—and because of this, millions of retirees have lost huge sums of money.”

Who are the people doing the stealing?

We should all fear the slick phone scammer with the well-rehearsed lines, but some of the most common perpetrators of EFA are those people closest to the money: family members and unscrupulous financial advisors.

Both of these threats can be mitigated to some degree through early, ongoing and detailed communication with trusted loved ones. But the fact remains that some children feel entitled to the money, in part, because they may someday inherit it.

I advise families, even though it can be uncomfortable, to bring as many relevant people (i.e. all the children/benefactors, the spouse and the advisor), in early for frank, straightforward discussions about money, wills and expectations.

But what if the advisor is the abuser?

“Probably not a week goes by that we don’t meet with someone at Allworth Financial who’s been working with another firm, and they’ve started to suspect that something’s wrong, and so they come to us for a second opinion,” said Schauer. “Sometimes, the abuse is very obvious. For instance, an unscrupulous advisor convinces someone to buy several long-term and illiquid annuities, and the client is 77 years old.”

It’s all around us, and so you need to be aware of the signs. When appraising the threat of EFA to a partner, friend or family member, what behavior patterns should you watch out for?

A change regarding their approach to money and finances
The desire to transfer assets without reason
Investments that are illiquid
Beneficiary changes to wills, trusts or retirement accounts
New “close friends”
In-home care professionals curious about personal financial matters
A sudden interest in contests or sweepstakes
Obsessive demands for privacy about finances
Expenses the person doesn’t remember or acknowledge
Phone conversations with unfamiliar callers

How do you protect yourself, your parents, or your loved ones from elder financial abuse?

EFA can come at people from so many different directions, be they personal, familial, professional, or through criminals using phone or computer scams, that trying to stop it feels a bit like using your finger to plug a leak in a dike.

But because someone you love is almost certainly at risk, you have to stay vigilant, even though it may well lead to discomfort.

Protect your friends and family from EFA by:

Being nosy
Setting up automatic bill pay
Shredding everything
Getting durable power of attorney
Checking credit reports often
Getting to know his or her advisor, accountant and attorney
Reviewing his or her bank statements
Vetting any and all charities
Considering the disconnection of the ground line

Conclusion

We have a team member here at Allworth Financial whose parents were hit by three separate scams that cost them $30,000. Elder financial abuse can happen so fast, and it can originate from so many different sources, that it’s a huge challenge to keep yourself and your loved ones safe.

But keep safe, you must.

If you or a loved one is being targeted, or if you suspect you’re being targeted, shut down any financial avenues and/or contact with the person or entity in question. Then immediately notify the police, and then contact your Allworth Financial advisor.

[1] Metlife 2015 Elder Financial Abuse Study

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