Is financial abuse happening to YOUR clients right now? Of course it is. There is no escaping it. A recent study puts the amount stolen from elders every year in our country at over $36B. With a problem as big as this, no group of elders is immune.. If you took a survey of your existing clients all age 65 or older, and asked them how many have ever been taken advantage of financially, you would be sure to get some clients who would admit to this. If you look at your own experience and count up any instance you know of, whether it is in your family, your neighborhood or your book of business, you will likely find some financial abuse as well.
Why Is This Important for You?
The amounts stolen, fraudulently taken or just snatched from the unwary, are shocking. Remember that when your client loses assets, you lose fees. That is the most basic reason this should be important to you as a financial professional. Doing the right thing to keep your clients safe is certainly a motivator as well. It shows that you do care about them. And beyond that, the regulators are increasingly aware that financial professionals are in a position to take action and, sometimes, to stop and prevent financial abuse. They will soon get past merely urging you to take action and to report abuse. They will ultimately make it mandatory.
And we think you can do more proactively than merely to understand how to report abuse after the fact. It would be great to catch more criminals but that is extremely difficult in many cases because they are very clever at evading law enforcement. And since family members are the most frequent abusers, we have an added problem in that many elders are reluctant to report abuse by their own to law enforcement. Mom just won’t call Adult Protective Services on her son, even when she knows he has stolen from her. We have seen this with our own eyes There are many instances of scammers getting into relationships with aging folks by phone or on the internet. The “friendly” relationships become addictive. These thieves persuade the victim to withdraw funds from their accounts. This is where the advisor comes in. Unusual withdrawals are an important warning sign of elder abuse. And when the advisor notices this in a client’s account there are choices available about stopping abuse. They include contacting a trusted other the elder has identified and warning them of what is happening. There should be more than one trusted person identified for every client. And by all means, contact Adult Protective Services and report it if you suspect fraud.
If you are worried about privacy rules, don’t be. The regulators of your industry want you to report abuse. They want you to make every effort to keep aging clients financially safer. If you are not sure about privacy, we can help you create a special privacy document here at AgingInvestor.com that gives you permission to call that third party. Every advisor with any client over age 65 should have this and understand how to approach a client about signing it. With permission like this, you should never hesitate to tell APS and the trusted other that you are concerned about your client being financially manipulated.
You can get more details about this elder abuse issue and what you can do as an advisor in Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. See particularly the chapter “Financial Elder Abuse: How You Can Fight the Crime of the Century“. It’s available right now so click HERE to get your copy today.
Capacity and competency are terms loosely thrown around these days. How can you tell if your client has financial capacity? This kind of capacity is the most complex and requires intact judgment. You must have a good working knowledge of it or you could come under scrutiny for giving advice or selling products to an individual who is impaired. One thing is certain: you can’t tell if your client has the capacity for making financial decisions just from a quick call or social chat when ominous signs already exist suggesting that some impairment is present.
What do we know about financial capacity? It is defined as “the capacity to manage money and financial assets in ways that meet a person’s needs and which are consistent with his/her values and self-interest.” This seems straightforward, but it is not. Some people develop brain disease as they age, and with dementia, the erosion of mental capacity can take place over years. During the earliest stages of dementia, the brain cells are being damaged by the disease process, but the person has other brain cells “in reserve” and can still function in many areas without impairment. However, research has found that for people who are developing Alzheimer’s disease, financial capacity is already impaired even at the beginning stage.
If you have an elderly client who is still in charge of his finances, not unusual at all in our aging society, be aware that some clues may point to loss of financial judgment. To see those clues, you will need to observe your client over time and document the warning signs of diminishing capacity. Overall diminished capacity often means that a person does not have financial capacity any longer.
Financial capacity is divided into nine distinct areas. All nine must be intact for a person to have adequate judgment to act in his own best interests. One of the most important of the nine is the understanding of investments.
The person with this area intact is able to engage in and actively participate in developing an understanding of any financial investment decision. Knowing the value of a proposed transaction and the attendant risks are part of this area of competency.
If this sounds complicated, it is. You may be wondering if any of your clients are essentially competent in all nine areas. Some are not. Most people, if you wanted to take the time involved to patiently explain things like risk of an investment in simple terms, would get it. But when a client can’t tell the difference between a twenty-dollar bill and a five-dollar bill, that client is not competent financially, even if he can carry on a perfectly normal conversation about his favorite sports team or politics.
One clue to ask your client about is whether she is able to keep track of and pay all her own bills. If family or any other helper are doing this for her there is a reason. That may be that she forgets bills or pays them twice. That is a sign that financial capacity may be eroded. You need to take the next step and look at other areas of financial capacity before your client makes any further financial decisions.
If you aren’t sure what the nine areas of financial capacity are and you want to find out about this, you can do that fast in a chapter of our book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. The chapter that will quickly give you the answers you need is “Nuts and Bolts: What Are the Components of Financial Capacity?” Get your copy today by clicking HERE.
Many older people have a bit of difficulty remembering. We often dismiss this when we see it in a client, thinking it’s “just getting old”. It may be part of aging, as we do process things more slowly as we age and recall may take longer. But, there is a point when a problem recalling things should be a red flag for diminished capacity for you, the advisor.
What are those red flags anyway? How do we label them?
There are numerous signs of diminished capacity, more extensive than this article allows, but we’ll look at one category, which we call cognitive signs. Here’s a breakdown of what you should look for when your client has a lot of difficulty remembering things.
What to note and document about memory loss
This is one of the first things most advisors may notice in a client that causes concern. Perhaps she does not remember important meetings, decisions and discussions. Here are some examples of what you may see:
Multiple telephone calls in one day that are repetitive and do not make sense. The client forgets that she has already talked with you and is calling about the same thing in another call to you. She repeats a question she already asked you and that you already answered.
Client forgets why he has an appointment with you. This can be by telephone or in person. Perhaps the client himself asked for the meeting but then he forgets why. Or perhaps you wanted to discuss a proposed transaction with him and told him that, but when you call or he comes into your office, he has no idea why he is there. Trying to refresh his memory about it does not help.
Complete forgetting of an event that just took place. You just spent a hour with your client telling her some important information about upcoming changes to her portfolio. She seemed to understand when you were talking but an hour later she asks you questions as if the meeting you just had never took place. She had totally forgotten about it.
No shows.
You have arranged meetings, appointments with others or events that require your client’s participation. He agrees on the pre-arranged date and time but then does not show up. When you call him, he has no recollection of the event, that others are involved nor that he had agreed to this.
If your client demonstrates any of these indicators you need to be paying close attention and make an effort to contact your client more often than you did before you noticed these problems. Any or all of them might be warnings of developing dementia. The only way to determine if you have a serious problem here is to track these signs over time and keep good records of it.
If the problem gets worse, it is time to take it to the next level. In your organization that might mean escalation, or having the documentation reviewed by a committee. Ideally, as we see it, the next step should include contacting the client’s appointed trusted third party who would step in when the client became impaired.
To learn more about the other red flags for diminished capacity in your clients and how to document them, get a copy of Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. See the chapter “Know Your Aging Client’s Red Flags”. It comes with an easy to use checklist you can put to work right away. Click HERE for your book!
By Carolyn Rosenblatt, RN, Elder law attorney
AgingInvestor.com
<div class="signature"> <table style="border: 2px solid #999; border-style: solid; background-color: #f5fff5;"> <tbody> <tr> <td style="width: 110px; vertical-align: text-top; align-content: center;"> <div style="border: 1px solid #eee;"><img class="alignleft" src="https://www.aginginvestor.com/wp-content/uploads/2015/04/DavisRosenblattPublicityPhoto.jpg" alt="" width="123" height="116" /></div></td> <td> <h4>Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com</h4> Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too. Dr. Mikol Davis, Psychologist, Gerontologist offers depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients. <a href="https://www.aginginvestor.com" target="_blank">AgingInvestors.com</a> offers accredited cutting edge on-line continuing education courses for financial professionals wanting to expand their expertise in best practices for their aging clients. To learn more about our courses click <a href="https://agingparents.leadpages.co/ceu-choices/" target="_blank">HERE</a></td> </tr> </tbody> </table> <table><script src="https://agingparents.leadpages.net/leadbox-856.js" type="text/javascript" data-leadbox="1458b05f3f72a2:160053496b46dc" data-url="https://agingparents.leadpages.net/leadbox/1458b05f3f72a2%3A160053496b46dc/5663812699029504/" data-config="%7B%7D">// <![CDATA[ // ]]></script></table> </div>
Diminished capacity is sort of a catchall term that can mean different things. A person can have the capacity, for example to create a will or a trust, but at the same time that person might not have the capacity to understand the risks of buying a complex financial investment. Capacity is on a continuum. The more sophisticated the decision needed the more capacity it takes. The dividing line between impaired and unimpaired is not clear.
Is there any way to measure capacity? We have a number of things in the medical field that help give us clues and data, but there is no one, single thing that tells us for sure. We can’t see inside a person’s thoughts. What we do have is testing of the various areas of the brain, with standardized instruments that give us information about how a person thinks. We call it neuropsychological testing.
What is neuropsychological testing?
Neuropsychological testing (using groups of related paper and pencil and verbal question and answer tests) can provide useful information to take the question of capacity outside the realm of speculation. Test data provides numbers, scores, something specific.
This kind of testing can give useful information about which tested parts of a person’s cognitive function do or do not compare normally with the tested function of people of similar age and education.. When a person falls below a measure of what is normal, and we have test scores to tell us where and how, it can give us guidance about whether to allow a person to keep making financial decisions.
Testing is underused in helping us find out about a person’s mental capacity for numerous kinds of things, such as memory, following verbal instructions, understanding information and learning a new task. Not enough families know about it and request it and not enough others refer clients to the right source for considering it as a tool to give us more information. Perhaps older people resist it out of fear not “passing the test”. If clients secretly know that they are losing their memory and do not want to be found out, they will strongly resist any suggestion of testing.
What can the advisor do?
If you are worried about a client who seems to be “losing it” and you aren’t sure you have enough information about that, you can suggest that the client get a medical checkup, and that he ask the doctor to check into his memory. This is not a sure path to neuropsychological testing, to be sure. Unfortunately, doctors spend very little time with patients these days and a brief visit may not result in the follow up testing you would like to have done. But in some cases, clients are willing, particularly when encouraged to do so by a concerned spouse or other family member. In spite of obstacles, know that this objective way of measuring things does exist and it can help everyone involved in the senior’s life.
Want to learn more about best practices for clients with diminished capacity? Know the red flags and feel confident about what to look for.
Aging clients are an inevitable part of the landscape these days. People are living longer than ever. That’s great, but age brings risks to one’s mental capacity. And those risks put a burden on you the business professional to be aware of where to draw the line. When is it just not safe to rely on what an older client tells you to do?
Bear in mind that by age 85 one in three people will have Alzheimer’s Disease. This brain-destroying and progressive condition comes on slowly in most folks and begins to take its toll of judgment about financial matters quite early in the disease process. The person might seem perfectly fine in social discourse. That is not a guarantee of financial capacity.
We all know that financial abuse and undue influence are problems with our elders. We also know that better, more frequent and clearer communication about financial matters in families can do a great deal to protect the aging family members. But they’re not talking.
We have research to reveal how much of a problem this is. What is shows is that only a minority of seniors are sharing their financial information with their kids and the adult children are finding that aging parents are reluctant to have these money conversations.
Have you ever felt frustrated when you thought your client was showing signs of declining mental status? Did you ever want to get someone else involved in financial decisions but thought you couldn’t because of privacy rules?
The average advisor has seven clients with some form of diminished capacity. Perhaps you are one of them, not comfortable with the privacy laws that restrict you from calling in someone to help when your client doesn’t seem all there anymore.
If you are worried that you must just stand by and watch a vulnerable client make bad decisions, or worse, get ripped off by someone who is manipulating him and taking advantage of his cognitive impairment, there’s good news. There is a way around the confidentiality conundrum. You need your client’s permission in advance to call that third party.
How do you plan for the possibility of needing a third party? Take your cue from lawyers. When we have a conflict that would be there unless we get an ok from our clients, we design a document that allows the client to give up the right she would otherwise have. We get the client’s signed approval do to what we need to do whenever feasible. You can do the same thing with privacy restrictions.
Imagine that you have some clients over the age of 65. Imagine that you are a proactive thinker. You want to keep all of them safe and keep those clients, even if they decline cognitively in the future. Imagine that you have been really smart and have gotten a special permission document done. Every client over age 65 signs it. You are ready!
What Should A Privacy Permission Contain?
We recommend three essential elements for your document.
First, you need to identify the circumstances under which your client wants to give you the ok to call in that third party they identify.
Second, the document needs to be legally sufficient; i.e., it should have language like an advance healthcare directive or a standard durable power of attorney.
Third, it needs to be signed and notarized by your client.
How Do You Get It Done?
Your legal department should be able to help you. If not, a model document was created by lawyers at AgingInvestor.com, in the context of a senior-specific program to protect your aging investors. You can’t just throw one together. As you have to know, recognize and document the signs of diminished capacity that would lead to use of this kind of document, those are prerequisites. Then the matter escalates according to a standard procedure. Get a clear path. Find out more about it HERE.
Can you think of anything that makes a person more desperate than being in pain? You can’t stand it. Maybe you’ll fall for anything that promises to end your pain.
My mother in law, Alice, at 92 was feeling like that. She had chronic knee pain that was getting worse. She went with some friends to a”free lunch seminars”, always a vehicle for selling something.
This one was put on near a large retirement community. The place is full of fairly well to do elders, some quite wealthy. Nice target, right? The perpetrator in this situation was a chiropractor. He knew exactly what he was doing, promising to end everyone’s chronic pain. All they had to do was sign up for his “guaranteed” to work pain relief program for a mere $3000 payable in advance and of course, nonrefundable. He carefully never put the guarantee in writing, but he used verbally it to seduce anyone there into believing his promise of pain relief.
Alice signed up. I advised her not to go through with his program and politely told her there were suspicious things I found in checking him out. She said she was ready to try anything and he assured her that everyone got good results. She went anyway.
The chiropractor in question didn’t even see her. His assistant did the work, which involved very brief “treatment” and a very long pressured talk to try to get her to buy his expensive supplements which they now said would enable the treatment to work. As the scam became more obvious, Alice got disgusted. The “treatment” did nothing at all for her pain. She quit and asked for her money back. No dice.
With her permission we filed a complaint with the State Chiropractic Board. which prosecutes fraud and license violations through the state Attorney General. They pursued the chiropractor, eventually settling with him. He paid a fine and was probably placed on probation. Of course none of this gets Alice her money back. At last check he’s still in business.
Pain relief is a big opportunity for scammers. They may be chiropractors or others who have some kind of license. They may be selling magic potions on the internet. It could start with one amount and escalate as it did with the chiropractor to expensive add ons, his “supplements”.
Recent research shows that many seniors who get taken for relatively small amounts of money often become victims in escalating amounts over time. They want to trust when they feel desperate and that makes them vulnerable to manipulation.
What can you do as a professional if your client is victimized by a scam? Here are three things:
If you learn about this sort of shady character, encourage your client to fight back. File a complaint. Write a letter to the entity in power. You can offer your help with paperwork or filling out a complaint form. Not every predator can be stopped but some can if you help your client take action.
Warn other older clients. If you have aging clients, warn them by letter or email about any shady operators in your area. You never know who you might be saving by doing that.
Make it public. If your client’s story is useful and you get permission to share it, local newspapers, TV or radio stations may be interested in it. That’s one way to educate and thwart these predators.
Do you have an experience of seeing a client get taken advantage of by a shady character like the chiropractor here? We’d like to hear from you. Your colleagues can also learn from you. We invite you to send us your stories. Please email me: carolyn@aginginvestor.com.
Have you ever wondered about one of your own client’s capacity for making financial decisions? Professionals who directly or indirectly sell services and products to aging people may not be clear about financial capacity. It is indeed a complex thing, and one should not underestimate how difficult it can be to make a determination about whether a client is impaired. Does the client seem “out of it” sometimes? Forgetful? Is he acting strangely? Maybe you just dismissed it if you noticed those things. You may have thought, “he’s just getting old”. Maybe you didn’t think it was any big deal. But was it? Diminished capacity may not be obvious at all. Small warning signs can be missed. And every warning sign is a clue. The clues can mount up and paint a picture. You need to be able to see it. And first you need to know what to look for in your aging clients. How do you decide whether someone has diminished capacity for financial decisions? Ultimately, the question of capacity is a legal decision, aided by lawyers, medical professionals and sometimes by judges. And lawyers also have a difficult time seeing the grey areas and the nuances of thinking that comprise financial decision-making abilities. One thing every professional working with seniors should know are the warning signs of dementia. If you see enough of these warning signs, your client is likely to be impaired in her financial judgment Excellent information for the public is available on the Alzheimer’s Association website at alz.org.Memory loss is often the first sign of dementia. There is a difference between memory loss a non-demented person experiences and the memory loss that evolves in to dementia. As an example, forgetting a person’s name is common and we usually remember the name later. (Does this ever happen to you, “it’s on the tip of my tongue, but I can’t remember right now”?) People who are developing dementia don’t remember these things later. Their short term memory is eroding steadily. They forget what was said in the middle of a sentence. They forget appointments. They don’t remember that you spoke with them yesterday. Confusion is another sign. They may forget where they are going or get lost. They may exhibit unusual behavior from what is normal for them. These are the kinds of things that tip you off that a cognitive problem is looming. A person who shows you these signs may be impaired for making safe financial decisions. Beware of drawing general conclusions about dementia or Alzheimer’s Disease from a single case with which you may have personal experience. If your client is not doing what your grandmother with Alzheimer’s did, you can’t be certain that your client does not have dementia. Have you as a financial professional had any personal experience with dementia in a family member or client? Let us know about what you did to handle the issues affecting so many. We welcome your input. Need a quick checklist to use to identify the 10 red flags of diminished capacity in your clients? Get yours now by clicking below. It’s free.Click here to get your free downloadable Checklist “The 10 Red Flags of Diminished Capacity” Dr. Mikol Davis & Carolyn Rosenblatt, R.N., Elder Law Attorney
There is something about memory loss that should raise a red flag when it comes to your aging clients and their investments. Are you prepared?
By 2030, there will be 72.1 million people in the U.S. over age 65, or “elders”. 7.7 million of them will have Alzheimer’s Disease (AD). This directly translates to a large number of impaired clients making or attempting to make financial transactions and decisions. Some of those transactions could be with you.
According to respected researcher, attorney and neuropsychologist at the University of Alabama, Burmingham, Dr. Daniel Marson, losing capacity for financial decisions is something we need to be ready for, as it affects a huge part of our population. The problem is growing. Financial institutions, organizations and banks need to take preventive steps to avoid financial losses and exploitation of their clients.
What are the implications for the financial services industry? Demographics and dementia demonstrate that policies need to change and institutions need to explicitly plan for diminished financial capacity in their investors. We’re not just talking about escalating a matter to compliance when a client seems to be behaving oddly. We are suggesting that institutions and organizations get over the brick wall excuse that it’s not their problem, it’s the family’s problem. Financial professionals need to change the thinking that privacy concerns prevent them at all times from doing anything unless the client gives permission. A client who is impaired for decision-making may not be willing or able to give permission for you to discuss a problem with family until it is too late. Getting permission needs to be a proactive mandate.
Privacy does not have to be a problem if your organization, institution, or you, as an individual plan for the possibility of diminished capacity as a part of all investment transactions. That planning will include obtaining a special authorization for the financial services professional to contact a designated person when certain criteria are met. That, of course, means thinking through, with the input of aging experts, the criteria that would trigger the use of the special authorization.
Further, one should develop an agreed upon plan of action for the financial professional when the criteria that demonstrate diminished capacity are identified. This will take collaboration among all the players in institutions, so that policy development is uniform, regulation-compliant, and fair to the aging person who may be developing impairment.
Most importantly, a secure path of communication and action for the institution needs to be in place. No one with a questionable aging client should be left wondering:
Should I escalate this to compliance now, or does it take more?
Do I have the authority to contact a family member, or does that violate my client’s privacy and the laws about privacy?
What steps should I take now to protect myself?
Clients with memory loss are likely going to become impaired for making financial decisions at some point. Do you want to lose the assets under your management because your aging investor can’t figure out what you are saying and can’t approve what you need to do to protect him from disaster? We see an absolute connection, based on very solid research, between the dangerous red flag of memory loss and financial loss.
If you have heard the term “sliver tsunami” you may know that it refers to the massive wave of aging folks in our population. In case you haven’t noticed, it has already hit and your feet are getting wet.
Get a one page checklist you can use to identify ten signs of diminished capacity by clicking HERE. Be ready for aging clients and know what to do!
U.S. Senator Patty Murray, U.S. Secretary of Labor Thomas Perez, and WHCOA Executive Director Nora Super discuss aging issues at WHCOA Seattle Regional Forum – Credit: white houseconferenceonaging. gov
What Is This Conference and Why Is It Important?
Every ten years the Federal government sponsors a Conference on Aging.
The relevance of this conference to financial professionals is that it identifies the most common problems aging Americans face and it provides direction for planning for seniors’ needs. It is worth reading the final report. You likely have some boomer age clients and perhaps some aging clients as well. Be aware of what is important to them and you’re likely to keep them as clients.
Who Attended the Conference?
Beginning in February 2015, WHCOA held a series of regional forums for its Conference on Aging to engage with older Americans, their families, caregivers, leaders in the aging field, and others on the key
issues affecting older Americans. The concept was to hear about seniors’ issues and plan accordingly. The series of discussions was co-sponsored by AARP and planned in coordination with the Leadership Council of Aging Organizations, a coalition of more than 70 groups,
Each forum included 200 invited guests — older Americans, family and professional caregivers, aging experts and others. These discussions took place across the country.
Reading about the subjects they discussed and the conclusions reached in the conference Final Report was not a surprise to us at AgingInvestor.com, as we are in the field. But one thing did surprise me completely: no one gave much mention to the need for thorough financial education and planning
with professional help.
There was mention of the Department of Labor’s initiative to facilitate State creation of retirement savings programs. There was also discussion of the U.S. Department of the Treasury’s recently issued guidance clarifying that employers sponsoring defined benefit pension plans generally may not offer lump
sum payments to retirees to replace their regular monthly pensions. As noted in a recent Government Accountability Office report, such lump sum payments transfer longevity risk and investment risk from employers to individual retirees, putting retirees at risk of being unable to maintain their standard
of living or outliving their assets in retirement. Wouldn’t financial advice help? No mention was made of the value of at least seeking advice from financial professionals to maintain income while investing responsibly for those who did get a lump sum payment.
The report emphasizes the need for providing lifetime income and seems to favor employers offering annuities as part of retirement planning. The Treasury and Labor Departments previously have issued
a series of guidance documents encouraging plan sponsors to offer responsible annuity options to help protect retirees from outliving their savings.
The Gap
That may work for some, but I found myself at a loss as to why mention was not made of the importance of professional guidance in financial planning, which may be the best way to ensure that an individual
does not, in fact outlive his savings. That’s your job.
Opportunity for Financial Advisors
An obvious opportunity for financial advisors is to offer financial education to members of the public. Some attendees will not have enough to make new investments, but others will. With 10,000 people turning 65 every day and the oldest boomers turning 70 now, financial advisors can play a key role in helping aging members of society do better with managing their money as they age. Advisors can improve the sometimes negative public perception of the industry by stepping up, putting on few seminars with the basics of saving and investing and capturing some new clients in the process.
Need to update your information about long term care? Get a short book that tells you how to best work with your aging clients, including planning for the costs they may worry about the most. Working With Aging Clients is a sure bet, available at AgingInvestor.com.
Aging clients present many challenges for their financial advisors. There are physical changes in hearing, vision and mobility as well as memory issues. This course shows the advisor how to accommodate for the changes that normally accompany aging so they can best serve older clients. It also offers strategies to address changes that are not normal, such as cognitive decline and loss of capacity for financial decisions. Talking to clients about these is likely to be uncomfortable. With the expertise of the psychologist who helped author this course, conversation scripts are offered on how to bring up and talk about delicate subjects tactfully. We illustrate advisor-client dialog with videos and demonstrate the best ways to talk to a client about giving up decision-making authority when impairment sets in.
Learning objectives:
Identify ways to accommodate a client who has physical impairments that are barriers to advisor-client communication.
Plan and know how to rehearse the words to use when it is time to approach a client with memory loss about getting a third party involved in financial decisions.
Manage client resistance to discussing these difficult subjects.
Use basic rules of communication that are proven success techniques to approach any difficult conversation with your client.
Our population is living longer than ever. The risk of dementia rises with age. That means that most of us are going to encounter problems of aging in our clients.
We need to recognize the red flags of impairment that will affect financial capacity. These include:
Cognitive signs, such as memory loss and difficulty understanding the conversation
Communication, calculations and orientation problems
Emotional signs that are out of character for your client.
It is essential for every financial professional to understand the complexity of financial capacity and appreciate how many parts it has. There are 9 domains of financial capacity. You cannot determine if a person is impaired or not just by talking on the phone with her or having a brief meeting in which you give information.
A normal social conversation with the client is not a measure of whether or not the client has diminished financial capacity.
The more aware you are as a professional, the better chance you have of protecting your client from loss and protecting yourself as well.
Learning objectives:
Prepare yourself for the wave of aging clients by understanding the demographics of our aging population and the risks of dementia associated with aging.
Understand the 9 domains of financial capacity and learn how to spot problems with any one of them.
Be able to identify red flags of impaired cognition that should prompt you to act.
Develop a personal plan for what to do when you see warning signs of diminishing financial capacity
The professional crooks are at it again. The U.S. Attorney’s office recently charged six defendants with yet another telemarketing fraud scheme targeting the elderly. The allegations are that the con artists sought out and preyed upon the elderly through their lottery scam. We see these reports often in the news, to the point that they seem very repetitive. The characters and the amount of money stolen from elders changes but the methods are the same over and over. They caught the scammers this time and charged them with theft of a total of $400,000 from various victims. That’s the least of it. Other scams bring in millions from their vulnerable victims.
Why do elders fall for these things? Why don’t they get that the “Nigerian prince” or the “Jamaican Lottery” are clearly bogus and not to be trusted? (more…)
Carrie got concerned when her brothers suddenly began to exclude her from their Mom’s financial affairs. It didn’t feel right, but she wasn’t sure she could do anything about it. When she called, I got that “slow burn” feeling that comes over me when I hear about financial elder abuse. As a consultant for folks with aging parents, it’s not the first time I’ve heard this kind of story. (more…)
The securities industry is pushing to impose temporary holds on certain transactions that may be precipitated by a clients’ declining mental capacity, or purported loved ones who may be trying to swindle them. Sounds good in theory. Too bad it won’t solve the problem of financial abuse. Does the industry think that waiting is going to make the problem of predators go away?
Here is an example of a real case in which this exact method of the broker waiting and hoping didn’t do a thing for the elder who was being abused. READ what happened:
Most of us hear about unscrupulous family members taking advantage of their aging parents or grandparents. And everyone knows that internet scams abound. The one in which the scammer calls an elder and pretends to be a grandchild in trouble is notorious. And unfortunately, successful as it still goes on. Funds from grandma’s account get wired to Western Union and the thief disappears.
Financial elder abuse is rampant. The National Center On Elder Abuse puts the amount stolen from elders each year at $2.9B. But a privately run recent study calculated the amount at a shocking $36B+ per year. Who is doing this to our seniors?
Family members are the most frequent abusers of elders, because of access, exploiting the relationship of trust, and knowing just how easily manipulated a parent or other loved one can become with aging and dementia. Family members usually know how much money their parents have and how to get the parent to either give it to them or give them control over it so they can take it without the parent’s knowledge. Sadly, we see this often in our consulting work at AgingParents.com.
Caregivers, who also develop a relationship of trust with their care recipients, have the advantage of being with the elder in unsupervised situations. Ruthless caregivers get the elder to sign a power of attorney and being dependent on the caregiver, the elder may be fearful and intimidated if she does not acquiesce to the demands of the caregiver. In one case, a caregiver managed to steal $4M from a 74 year old client with multiple sclerosis who became physically unable to manage for herself. The caregiver got a power of attorney and opened 67 accounts in eleven banks. One bank finally caught on and reported their suspicions, but it was too late. The caregiver went to jail but the elder died before the criminal’s sentencing.
In spite of the easy access family and caregivers have to seniors, the most dollars are actually stolen from elders every year by professionals. That includes broker-dealers, insurance sales persons, lawyers and others in a position of both trust and authority to manipulate or outright steal elders’ funds. About a third of FINRA prosecutions involve elders. There are ripoff artists among us.
One thing that doesn’t seem to change over time is the reality that most cases of elder abuse go unreported to authorities and are therefore never prosecuted. The thieves get away with it. In one case we saw in our office, a 92 year old whose son had power of attorney for her took thousands of dollars from her bank account and refused to account for it. We were involved in helping her change the authority he had over her finances. I spoke with her and described that what her son had done was wrong and was a crime. She knew it was wrong and did not want to take action. Her response: “I don’t want my son prosecuted”.
Many elders are more frail and less willing to pursue legal remedies than a younger person may be. They suffer from shame, depression and embarrassment that they have been so taken in by anyone. Some just don’t have the energy to fight back and the thieves know this. They count on it.
What can the concerned financial professional do about financial abuse? There are ways you can be more vigilant and protective of clients than ever. Here are five things to keep in mind for any aging client.
Know that even at the very earliest stages of dementia, a client is likely to be moderately impaired for making safe financial decisions. Pay attention to their ability or lack of it to understand complex or risky products such as non-traded REITS, which regulators disapprove of selling to seniors. Avoid suggesting or offering any products which require significant analysis by the client if you have even a hint of cognitive decline in that client.
Know that age alone is a risk factor for developing dementia and its accompanying diminished capacity. By the time your clients reach age 85, at least a third of them will have Alzheimer’s Disease or other dementia. Two out of three persons affected by Alzheimer’s are women. Be especially vigilant with your aging female clients.
Know your client. If he or she departs from a long standing spending pattern and you suddenly see unexplained large cash withdrawals, be suspicious, ask questions and probe. Someone could have gotten control over your client’s account. Don’t stand idly by. Get involved and find out. Report abuse if you suspect it. Take action to stop the abuse. Protect your client.
If you work in an organization where professional colleagues have aging clients and there is opportunity to either sell them unsuitable investment products or otherwise manipulate these elders, lobby your organization for enhanced and more frequent scrutiny of all client accounts for people age 65 and up. The Federal Government and state laws define an “elder” as someone 65 and above. Watch those accounts more often and in more detail.
Develop your own best practices, senior-specific policy, in writing. Training in best practices and commitment to your clients’ safety will enable you to get it right. Once you have a clear policy in place for yourself independently or for your organization, everyone can respond to red flags of diminished capacity and warning signs of elder abuse in a uniform way. That will enhance your ability to honor your clients so you can protect him from predators.
You hear the term now and again, “MCI”. Is it a diagnosis?
Doctors sometimes tell an older patient he has this, but no one seems to exactly pin down what it means. How mild is “mild” and what does it mean in terms of diminished capacity? Here it is in a nutshell:
Mild Cognitive Impairment refers to a degree of cognitive decline that is in between the cognitive changes associated with normal
aging and those associated with clinical features of dementia.
Many people who get a diagnosis of MCI do go on to develop dementia but some do not. Here’s an example of a person who has MCI but does not have dementia.
Gertrude is 89 years of age and has been living alone in her own home. She got confused on her way home and was found driving on the wrong side of the road. A Good Samaritan brought her home. Fortunately, she did not hit any other cars. Cognitive decline was the cause of her confusion. She has mild cognitive impairment. She must not drive anymore, and she is willing to admit that she has to give up the keys.
She can’t remember what is in her bank account. Recently there was fraudulent activity and a large amount of cash was stolen by hackers. She must also give up managing her own finances.
Gertrude is very independent. She can take care of herself physically, though she does need her cane to walk. She wears hearing aids, but is able to follow the conversation around her very well when she can hear. She is clear about her likes and dislikes and communicates them emphatically. She is oriented to the date, and place where she is. Her short term memory is poor. She should not live alone any longer as she could forget to turn off the stove or the water faucet.
Gertrude is a good example of a person in what we call “the gray zone”. She is partly independent and partly dependent now. She is able to do a lot for herself but she needs help with her finances particularly. She appointed a licensed fiduciary to handle her bills and watch her bank accounts for her. She and the fiduciary went to both her banks to make sure the fiduciary’s name is on the accounts. She will have a companion live in with her to keep an eye on her safety but still allow her to do the things around the house and in the community she likes to do. The companion will do the driving. As she gets older, her care needs will probably escalate. But for now, she has just what she needs and she accepts that her independence is getting limited by her memory loss.
If you know someone who seems to have the same issues as Gertrude, you will be interested in Chapter 10 of my book The Family Guide to Aging Parents: Answers to Your Legal, Financial and Healthcare Questions. That chapter is Protecting Our Aging Parents From Abuse. I offer you five good tips, steps you can take now to keep your loved one safe. They are Protective Measures: talk with them about financial abuse, educate yourself, start having more frequent contact, snoop a bit, and check the mail from time to time. Get your copy now and learn more, with all you need to know to keep someone like Gertrude safe! CLICK HERE.
This really happened. If you had this 91 year old client, what would you do?
Emma liked to play the sweepstakes. But her memory was starting to decline. A lot. When it came to her bank account, she forgot to check her statements as she had always done. Odd withdrawals began. Hackers had gotten in. Before she realized what had happened, someone had withdrawn a total of $40,000. It was time for her family to act. Emma was a planner. She had trusted her son and put his name on her trust, her durable power of attorney and her health care directive. But her son needed cash. He became an opportunist.
She had a daughter too, but she was old fashioned and thought the man should take care of the money. Her son, Jonny knew his mother needed to stop handling her finances. So, he rushed her off to the clinic and told the doctor what happened with her bank account. After 15 minutes, the doctor, without doing any psychological testing on Emma decided that she was no longer capable of handling her affairs. He and another clinic doctor signed a handy form letter to that effect and gave them to Jonny. Jonny then went to both Emma’s banks with a copy of the trust appointing him to take over when Emma could no longer handle her affairs. He produced the two form letters from the doctors and was instantly given access to Emma’s account. He withdrew all of her cash, a total of $20,000.
Jonny then informed Emma that she was coming to live with him. He would charge her $1000 a month to live there. Emma was very angry. She admitted that she could no longer keep track of finances, but she did not want to give up her home, her community and the things she loved to do. She was alert, and knew what losing her home would mean. Jonny worked full time. His idea of a life for his mother was to take her to adult day services early every morning and leave her there until after 6pm when he returned from work. She wanted none of it. She felt betrayed, duped into giving Jonny all the power and furious that he could run her life without any interest in what she wanted.
There is danger in assumptions. Loss of the ability to handle finances safely does not mean in every case that a person can’t make decisions about where to live, what she wants and who should be in charge of her affairs. Emma had the strength to stand up to her son. She contacted us with her daughter at AgingParents.com. Was Emma too impaired to change her trust? The only way to safely answer this controversial question was to have Emma undergo psychological testing and some interviews with Dr. Davis, my partner here.
Testing was done and two interviews on different days were conducted. Result: Emma had mild cognitive impairment and still had the ability to decide who should handle her affairs. She did indeed have significant short term memory loss but many of her other abilities were intact. Her daughter then took her to a local attorney and she immediately changed her trust to appoint an independent, licensed fiduciary to be her new trustee. I doing so, Emma removed all power from her son. She put her daughter on the trust too, but only for oversight of the fiduciary. The fiduciary would have complete decision making ability as to how Emma’s funds should be spent. And she gave authority to her daughter on her healthcare directive to decide where she would live, as she knew that her daughter would honor her wishes to remain in her home, with a helper, for as long as possible.
The risk of making the assumption that loss of capacity for financial decisions means total loss of the ability to think or decide everything else can lead to disaster. Emma was nearly kidnapped by Jonny who was determined to make his little scheme work, all to his benefit ($1000 a month). With total power in his hands, he likely would have immediately sold her house as well. She was fortunate to have escaped a fate that would have made her both frustrated and miserable.
The takeaway here is to beware of too hasty conclusions that an aging parent is completely incapable of decisions other than financial ones. Financial capacity may be the first intellectual ability to go when impairment begins but it is not a sign that the person has no ability left for anything else. While it is true that many impaired elders grossly overestimate their own ability and insist on living in unsafe conditions, some elders are not as impaired as circumstances might suggest. Psychological testing can provide important objective data to help families make the right choices. Emma was willing to do whatever it took to stay in her own home. At 91, we at AgingParents.com thought she deserved that dignity, at least. Emma has regained her sense of control and we’re glad for her.
Thwarting Elder Abuse: Who Should You Call When You Suspect It?
Imagine this: it happens. Abuse seems to be going on right in front of you with an aging client. A family friend is manipulating her, and you’re pretty sure about that. What would be the first thing you could do?
Perhaps you’ve taken a class or training in senior specific issues like dementia. (You’ll be especially knowledgeable if you’ve gotten training with our Aging Investor.com webinars!) You’re determined to stop it if you can.
You may think of calling Adult Protective Services, but you also know that APS is limited, and addresses situations that are criminal in nature. Sometimes when an elder seems to be going along with the abuse, APS may have its hands tied. For example when a friend close to the elder is pressuring an elder into giving him large amounts of cash and draining the elder’s bank account, the elder may not show concern. The aging person could be subject to undue influence or perhaps intimidated and afraid to say “no”. When the victim seems willing, you have to look beyond APS to try to thwart the abuser.
One thing every professional needs to have in every file is a list of contacts your client has provided to you, as you have requested, to use when something seems amiss or when your client shows signs of memory problems. You need specific written permission from your client to communicate with the people on the list. The list should include trusted family members, the client’s estate planning attorney, a long term friend, clergy or trusted other professional such as the client’s accountant.
When you have the client’s permission to contact these individuals, you can start asking questions about the suspected abuser. If the abuser is someone on the list, ask everyone else their impressions. People do change and financial desperation or greed can cause someone to misuse the trust the elder has in them.
Thinking it’s really none of your business that your client has a person who is taking advantage of her is not the answer to our massive problem of elder abuse in our country. We all must do something when we can. We have to speak up, get nosy, ask questions and take an active role. In asking the client’s list of contacts about the issue, you may learn a lot. Perhaps the “friend” has a gambling or drug problem. Perhaps your client just lost a spouse and is very vulnerable. Others on the contact list who may not see what you see can get involved in looking into the situation after becoming aware of your suspicions. Working together, a group can present a united front and create a strategy to stop the thefts and manipulation.
A very helpful resource for any professional is to search for and know competent elder abuse lawyers who have the skills, knowledge and will to step in and try whatever is possible to protect the aging person or her heirs. You can find one by searching your local county Bar Association website. Most have a directory or lawyer referral service. Lawyers are listed by specialty area. For example, in San Francisco, the Bar Association has a listing for the category of elder abuse. Under it there is a sublisting “Financial Abuse by Family or Friends”. That category will likely lead to someone who can help evaluate a case.
When the abuser has talked the elder into changing her will and disinheriting her children in favor of the so-called friend, that gives the elder abuse lawyer something to work with. Elder abuse litigators will generally listen to a possible case and give you an opinion about whether it is a matter they can handle. And aggressive proactive steps can be taken to thwart an abuser determined to clean out the assets of a supposedly willing victim.
If the abuser is a bad apple within the financial services industry, there are specialty lawyers who prosecute claims handled in FINRA arbitrations. They can be found through the Public Investors Arbitration Bar Association.
Not every senior who is being abused financially is able to see it. But those who have a role in the elder’s life can do much to at least try to stop the abuse. Loss of financial judgment is a reality that can occur as people age. If we don’t want to see more destitute seniors who were victimized, think of how you can help. Ask questions, call contacts and refer to an elder abuse attorney if you see this problem.
Philip Marshall was devoted to his grandmother, wealthy philanthropist, Brooke Astor. Her victimization by her own son, Philip’s father, Anthony Marshall, created irreparable harm to the relationships in the family. Anthony Marshall and one of his attorneys conspired to divert millions of dollars to Anthony’s benefit after Ms. Astor developed dementia. They were both convicted in criminal court of financial elder abuse. Would you have had the courage to stand up to your own father and take on the cause of justice of your grandmother if you had been in Philip’s shoes?
Philip recently contributed to the American Bar Association’s journal BiFocal, a publication of the Commission on Law and Aging. He wrote a piece in the hope that the telling of his sad family circumstances would continue to contribute to the recognition of elder abuse and exploitation as an insidious and pervasive national problem. Parts of his article are summarized here.
Philip did not start out as an expert in elder abuse. He loved his grandmother, who had always been a donor to worthy causes, being described as “a humanist aristocrat with a generous heart”. In her later years, she was increasingly isolated by the actions of Anthony Marshall. Close friends were denied visits. A long time and caring staff member was fired. Anthony Marshall, Brooke’s only child, had been appointed power of attorney. He used his power to abuse and control her. There were many red flags in Anthony Marshall’s actions. He sold Brooke’s favorite painting, which she had bequeathed to the Metropolitan Museum of Art, one of the objects of her charitable giving in her earlier life. The paining brought millions, two of which Anthony kept as a commission.
Brooke loved her country house, where she hoped to spend her final days. Anthony closed the housed and fired Brooke’s most loyal staff member, her butler Chris Ely. Under pressure from two of Brooke’s closest friends, Anthony reluctantly agreed to reopen the country house, but shortly after that, moved his mother back to her apartment in New York.
Philip was suspicious of what he saw happening and began to speak with more staff and caregivers. He learned that his grandmother’s lifestyle, emotional and physical care and life were being compromised by his father’s actions. He could not bear the damage he witnessed to her psychological and physical well being. He sought advice. He met with his grandmothers’ close friends and decided that something should be done.
Philip petitioned for guardianship. This always presents an uphill battle when the only adult child is in charge and the psychological abuse and neglect are so difficult to prove. The petition was granted and Philip immediately moved his grandmother back to her country house. By the time the petition was granted, his father was forced to return over $11 million in assets and pledged over $10 million to cover any future claims. But the battle was far from over.
Ms. Astor died peacefully in 2007 with friends at her side. Following her death, Anthony Marshall filed papers on court using three codicils (additions) to her will which redistributed almost $100 million to his control. The unbridled greed of Philip’s father was shocking. He was already provided over $60 million in the original will. That wasn’t enough. He had to conspire, forge documents, manipulate and abuse his own mother to get tens of millions more.
The New York DA had evidence of the criminal abuse case and indicted both Anthony Marshall and his attorney, Francis Morrissey. The case went to trial in 2009. Philip had to testify against his father. There were many witnesses to the abuse and financial manipulation. Anthony Marshall was convicted on 15 of the 16 counts against him. All counts but one were upheld on appeal.
At AgingInvesor.com and AgingParents.com, we are vigorous advocates for stopping elder abuse. We applaud Philip Marshall not only for his courage to bring the guardianship petition in the first place, but to continue the battle to honor his grandmother’s legacy of charitable giving, as originally provided in her will. His actions came with a huge emotional and economic cost to himself. But could not live with the injustice he saw. He was willing to air the family’s dirty linen in public. He was willing to take sides and stand up for the vulnerable person with dementia his grandmother had become. Let his story be an inspiration to all of us.
Until next time,
Carolyn Rosenblatt, RN, Elder Law Attorney, Mediator
You’d think that after all our vets have sacrificed for our country that somehow slimy manipulators wouldn’t go after them specifically. But, sadly, vets are prime targets for so called “veteran’s advocates”, whose objective is to get their money. Here’s how they work:
The objective is to sell vets annuities, which tie up a person’s money for years and years. Annuities of this kind are usually not at all suitable for an aging person. The seller, a company owned or backed by an insurance company, offers veterans a free lunch “educational” seminar. An insurance salesperson is the front for this presentation. They go after elderly residents of retirement homes and assisted-living facilities and convince them that they can get free Aid and Attendance pension benefits offered by the U.S. Department of Veterans Affairs.
These benefits do exist, but no one who is wealthy qualifies for them. The vets at the seminar are persuaded to “reposition their assets” in order to apply for the benefits. Unwitting senior veterans are sold annuities so that they can qualify. Of course that generates handsome commissions and profits for the insurance agent and insurance company.
The insurance companies and their agents selling the annuities go after wealthy seniors in expensive retirement facilities, because people who are truly qualified for Aid and Attendance have no money. They induce the senior to put large amounts of money into an irrevocable trust so they appear poor and can thus apply for free Aid and Attendance.
The wealthy senior vets who get taken by these scammers would never qualify for Aid and Attendance anyway, as one must be low income and with very limited assets to be eligible. Buying annuities does not fix that.
A prominent attorney has now filed a lawsuit against one of these insurance companies and the agent who held himself out as a volunteer for veterans when he was really a salesman. Fraud is alleged in the lawsuit, filed in Riverside County Superior Court in CA. We at AgingInvestor.com hope the case is successful.
How do these slick salesmen who outright lie to senior vets keep getting away with these schemes? The annuity sale scams are a problem nationwide. Victims of financial elder abuse rarely report the abuse. They are elderly, get overwhelmed with the vicious battle the insurance companies will put up to defend their actions and they don’t want to do it.
If you would like to do your part to warn your aging clients or family members about these vet-targeted annuity scams, please send out emails or letters to them and warn them to be alert to the problem. Get your free sample email or letter form from AgingInvestor.com by clicking HERE. Information is power and implementation of this information can protect your clients.
Imagine you’re at your desk, calling your elderly client for approval of something you’d like to do with his portfolio. The last time you spoke with him, he seemed a little “out of it” but you carried on and did your work. Now, you’re on a call with him again and he’s just not getting anything you’re saying. You repeat patiently. Nothing. You suggest talking to him at a later time.
When you call back two days later, your client has no recollection of the earlier conversation that had you concerned, and worse yet, he still can seem to grasp even the simplest explanation of why you’re calling.
What should you do?
Your client has presented some ominous signs of cognitive impairment, which include inability to track the conversation and memory loss. He has no memory of your call two days earlier. Prompting him by reminding him of when it was and what you said didn’t help.
If you know there is a problem, there is one major reason why you absolutely must do something about it. That is: clients who are developing cognitive impairment are sitting ducks for financial abuse. The abuse could come from a family member, which is an unfortunately common occurrence. It could come from a credit card company who tricks your client into signing up for years of something she doesn’t want or need. It could come from an internet scammer who preys on people exactly like your client, cleverly and with great success. As you may have heard, the latest study on financial elder abuse found that it costs our seniors $36.48 billion a year, rather than the previous estimate of $2.9 billion.
If you believe that confidentiality prevents you from sharing anything about your client with anyone else, take you cue from the Canon of Ethics for lawyers, who have to honor confidentiality as much as anyone can. It says, paraphrasing, that a lawyer may but is not required to take protective action if a client is in danger. In my mind, any ethical lawyer who believes reasonably that her client is in danger from potential financial abuse is going to take protective action. When you see a client too confused to follow your conversation and too impaired to remember a call two days before, that client may be in danger right now. If protective action means calling a designated emergency contact, then you should do it. If it means taking the matter to supervisory or compliance personnel in your organization, then do that as well. If you believe you have no other choice but to get rid of your client and no longer handle his finances or business affairs, then that is also a choice. However, we at AgingInvestor.com think you do have options other than firing your impaired client.
When we look at the law, it builds in protections for those who lose the ability to manage finances for themselves. One of these is a Durable Power of Attorney. Every prudent person who gets estate planning done should have a DPOA as part of the estate planning package. Take your cue from what the law allows any adult to do. That is, everyone should appoint a trusted person to take over when he or she is no longer able to manage finances independently. You client should appoint someone you can call and most importantly give you permission to call or contact that appointed person when your client demonstrates behavior as we described above. The person your client has designated on the DPOA to be her agent may also be the one she give you permission to contact if you believe she is vulnerable to abuse.
Every advisor, business professional and lawyer serving older clients should have permission to contact a third party in the event of emergency or imminent danger. You can get it done with a straightforward document.
If you aren’t sure how to get a waiver of privacy done or whom your client wants to designate, it’s time to act now. Get these things accomplished with the help of experts who can guide you. If you have them in your organization or at your disposal, create your policy without any delay. If you need help, we’re here to offer it at AgingInvestor.com. Contact us for advice, help with drafting your own special privacy waiver, or education about how to bring up the subject of cognitive impairment with your aging clients.
Competition for clients has always been there, but as investors age, something you might not have anticipated can happen. The vultures are out there. Competition with you for their invested assets can become an increased threat when an older client’s judgment is compromised. With impaired judgment, they might fall for the “free meal” seminar, a device to get them to buy an inappropriate product.
An older client who has always behaved a certain way about her investments can go through changes because of cognitive decline. You have absolutely no control over this process and in fact, you may not even notice it initially. Cognitive impairment can come on very subtly at first. What it can do over time is to cause your client’s ability to make good judgments about finances to go downhill.
A person who is actually ok financially may start to worry unreasonably that he is going to run out of money. Or a spouse gets ill and the costs of care skyrocket, making your client think he needs to do something fast to get a high return on his investments. There are a lot of slick salesmen out there who know this and count on it. They are the first ones to offer your client a free meal and a so-called “financial education seminar”.
According to FINRA research, 64 percent of those responding to a survey of people age 40 and over had been invited to an “educational” seminar with a free meal offered. FINRA, the SEC and state regulators conducted more than 100 examinations involving free-meal seminars. They found that in half of the cases, the sales materials contained claims that appeared to be exaggerated, misleading or otherwise unwarranted. And fully 13 percent of the seminars appeared to involve fraud.
These highly polished and sleazy sales people are more than happy to tell your client that they can do a lot better for the client than you are doing with your old, conservative and safe investment strategy. They dress well, have engaging personalities and are looking for someone who is fearful or easily manipulated. That could be your client. No matter how educated, smart or experienced your client is, anyone can suffer from loss of cognitive ability. Aging investors may not be as sharp as they were in a younger day, due to memory loss or other issues. The early warning signs of memory loss also suggest erosion of financial judgment. That can lead to impulsive purchases and lack of financial judgment about the risks.
What can you do about this? You have an opportunity to do a campaign with all your older investors which can enhance your image, increase the frequency of contact with them and educate them in the process. It could be a series of emails or personal letters. Remember that FINRA has issued a warning to all investors to be wary of the free meal “educational” seminar. You are the good guy or gal, bringing them this important information from regulators who want to protect them. The body of your email or letter can contain this information:
For every consumer, note these points FINRA wants you to keep in mind before you attend any “investment” or “financial education” seminar, especially with a free meal. 1. Investment seminars are intended to sell you something. Their purpose in not merely educational.
2. Beware of the persuasive effect of a high end venue, an expensive meal and a smooth, well-dressed presenter. These are collectively designed to impress you, but it does not mean that the opportunity being pitched it right for you.
3. Find out who is really sponsoring the event. At times, insurance companies, mutual funds or other companies offering their products are behind the pitch, financing the event and expecting that the speaker, who could be someone you know or recognize, will use the event to drive sales of their products.
4. You can use FINRA’s Broker Check (800) 280-9999 to see if the presenter is licensed to offer financial products. If the sponsor is an insurance agent, find out if he is licensed through your state department of insurance or the National Association of Insurance Commissioners. You can find out information about the one offering products for sale through your state’s securities regulator or the North American Securities Administrator’s association at (202) 737-0900.
Feel free to copy this right into a letter to your clients today. Vary it with your own words and headline. Anyone age 50 and up would be a good candidate to receive it.
Stay in communication with your aging clients.
Let them know you are concerned about the prevalence of these offerings by supposedly qualified people and ask if they’ve been solicited to attend any of them. If they tell you they want to go to a seminar, dig deeper. Ask questions. Offer to check out the presenters. If you step up the frequency of contact, particularly with an automated system of emailing your clients, you can only enhance the relationships you have with them. And in the process, you can not only build loyalty but perhaps save some of them from being seduced away from your responsible management by educating them about potential financial danger.
We encourage you to comment and share your own stories so that we all can become better informed and educated about new scams and ways to protect our older clients and family members.
Prior studies put the extent of financial elder abuse at $2.9 billion a year. A recent study finds that the actual amount stolen from elders is $36.48 billion a year. It’s no wonder that some call financial abuse “the crime of the century”. And yet, too many financial professionals see the warning signs and don’t know what to do or think that privacy concerns prevent them from doing anything.
I hope I can change your mind about the privacy issue. It should not stop you from doing the right thing.
According to the report of this recent study by True Link, a financial services company, the design of this survey was guided by recommendations of an expert panel of fraud researchers convened by the Financial Fraud Research Center at the Stanford Center on Longevity. That gives it credibility. No one has yet commented on any flaws in the study and I cannot say if there were any specific shortcomings, but the figure of over $36 billion is indeed startling.
Some of the most surprising study conclusions are that seniors who are younger, urban, and college-educated lose more money than those who are not. That somewhat defies the stereotype in other research suggesting that the isolated, lonely and unsophisticated senior would be the most vulnerable to loss. Another surprising finding is that legal but misleading tactics used to get a senior’s permission to take money from them leads to losses of $16.99 billion per year. The senior may be tricked into giving consent to credit card charges, for example and not realize how deeply or how long that consent ends up costing them.
So it’s not just the unsophisticated investor who gets taken by scammers. It can easily be your well educated client who thinks he knows more than you do and takes very foolish risks because he feels so capable of making decisions. Maybe he is impaired and doesn’t know it.
Or she gets sucked into long term contracts for things she doesn’t want or need. Once she gives approval for a credit card charge, she may be stuck with it. The study shows that people who start out losing a little each year tend to suffer increasing losses over time. A $20 a year loss can turn into a $2000 a year bilking and so on.
One thing every financial professional can do now is to develop a privacy waiver document specific to your organization or your management as an independent advisor that allows you to contact a trusted other whom your client has chosen, in the event that you see some red flags suggesting elder financial abuse.
If you’re unsure about what will give you a legally appropriate form for doing this, we can help you create one at AgingInvestor.com. Education and prevention of elder abuse are our mission. Everyone’s take on privacy may be different, but one thing is clear: you can’t continue to hide behind privacy as an excuse for doing nothing while your very own clients may be victims. Anything from telemarketer scams to undue influence by family to abuse by slick and unscrupulous salesmen of financial products that exploit older investors are everywhere around you.
One thing the study doesn’t explain directly is that it is also up to families to monitor their loved ones. True Link offers a product that allows monitoring of all an individual’s accounts in one place. Great, but what if the aging person won’t let family have access to the account information? That is a major issue. If you, as an advisor want to get involved, you can work with your client early enough that you have a clear policy in place when the time comes that your suspicions of abuse are raised. With a privacy waiver, you have the right to contact family or the person your client appointed to get the ball rolling on stopping abuse.
Caring and honest family need your help as a trusted professional to keep them alerted to any signs of trouble with an elder’s judgment about financial decisions. Some families are scattered all over and they may not have contact with your client about finances. You may not be able single-highhandedly to wipe out every abuse problem, but it seems clear that if you develop a clear policy for reporting danger signs and your suspicions of abuse, you can change the status quo.
You can sharpen your knowledge of an aging client and their financial capacity by completing one of our 6 C.E. courses at AgingInvestor.com. Try the one on understanding the signs of diminished capacity. Sign up today and get an hour of CFB accredited continuing education. Click HERE.
Elder Law Attorney and author Carolyn Rosenblatt, describes the latest financial scams that specifically targeting elders, and other aging vulnerable people. Watch video BELOW.
When your aging client has contact with you, consider it an opportunity to educate them about more than the status of their portfolio you manage. Your client’s efforts to maintain financial safety can be thwarted by clever scammers who are constantly devising new ways to take advantage of them. You are in a perfect position to help keep them informed about financial abuse and the latest information on tactics scammers use. Don’t make it someone else’s problem. Make it part of your services.
Take for example the “grandma I need help” scam. My 92 year old mother in law told me about this one. Someone actually had the nerve to try it with her, but she’s smarter than they were and it didn’t work. However, one of her friends did fall into the trap. Somehow the scammers got a list of phone numbers of many of the seniors living in the nicely appointed neighborhood in her retirement community. They get a young man to call from their list of numbers and say “Grandma?” when a woman answers. If she thinks it’s her grandson, she’s bait. The thief then says he’s in trouble, with some made-up some story to get her to worry about him. He then asks her to wire money right away to get him out of this jam. The unsuspecting do it. And get taken.
A newer scam is the gift basket trick. Again, the older person’s phone number and address are known to the thieves. They call the potential victim to be sure he’s home and then tell him they’re Express Courier or any other name and they have a gift delivery. Will he be home in the next hour? If the victim says “yes, I’ll be here” an official looking truck with a courier name on it pulls up within the hour, and the delivery man hands the victim a lovely basket of wine and flowers. The trap is in the delivery man then asking the victim for payment for a “delivery fee’’ because the basket has alcohol and had to be hand delivered to an adult rather than left on the doorstep. Or so they say. The fake courier insists on a credit card payment rather than cash, even if the fee is just $3.50. He uses a small portable credit card scanner and asks for the PIN number for any debit card. What the victim does not know is that the scanner is a device used to steal the credit card information, in the way this kind of information has been stolen from ATMs and gas station credit card machines in the past. The scanner the courier uses even prints out a nice little receipt, making it all the more believable.
The victim doesn’t realize his credit card information has been used to make a dummy credit card with his name on it, which the thieves quickly use until the victim cancels the card. Thousands of dollars can be stolen from the victim’s by ATM cash withdrawals and numerous purchases before the victim knows what is going on. People are getting tricked by this. The scam is working for the scammers and you know they will keep doing it until the public gets well informed enough to decline the offer of the fake gift delivery over the phone.
If you are managing accounts for older clients, take the opportunity to help educate them about these nasty fraudsters who are easily able to get their names and phone numbers. You can make a difference. Tell them in person or make a handout about scams to email or send to them. They may see you as protective of their financial safety in more ways than one. That can uplift your image, always a good thing. We’ll keep you informed about elder abuse and how to protect your aging clients right here at AgingInvestor.com.
We know that abuse of seniors is a growing problem. Based on information from the National Center on Elder Abuse, the majority of abusers are family members. However, only 44 out of 1000 instances of abuse are reported to authorities. Why aren’t more cases reported to the very authorities capable of stopping the abusers?
It seems to me that most family members are simply unwilling to “rat out” another family member even when they know that abuse is going on. When it comes to the seniors themselves, there is shame and embarrassment associated with being taken advantage of by someone close, especially someone they surely trusted. There is hesitation and fear. They want to talk about it but not do anything about it. The reluctance to report the abuse to Adult Protective Services is not limited to the seniors who can’t bear to call the authorities about a son, daughter or other relative.
I recently received a call from a distressed sister of a brother that she was convinced was stealing from their parents. He had total control over their parents, one of whom had dementia. His parents had appointed him as the agent on both the Durable Power of Attorney and the Advance Healthcare Directive. This gave him the legal authority to make both financial decisions without being accountable to anyone else and all healthcare decisions as well. I listened patiently to all the reasons she thought her brother was taking her parents’ money and using it for himself. I asked her if she had called Adult Protective Services.” No”, she said. When I asked why not she said “I don’t want to get my brother in trouble”. Where is the logic in that?
In another case, the elder herself had called. “I gave my grandson a big loan and he hasn’t paid it back,” she said. “But now I need the money to live on”. She described how her favorite grandson had taken title to her mobile home and gotten a loan, even after she had “loaned” him most of her savings. I explained that her chances of getting paid back were probably not very good, but the least she could do was to report what had happened to authorities. I advised her that taking a “loan” from an 80 year old and not paying it back would likely be considered elder abuse and it should be reported to APS. “Would my grandson go to jail?” she asked. I told her I didn’t know but it can happen when someone has committed this crime of elder abuse. She said, “I don’t want my grandson to go to jail”. Unfortunately, I am sure she did not follow up or do anything more about the problem.
Seniors like the 80-year-old woman are typical of why elder abuse does not get reported and therefore prosecuted more often, even when a family member is well aware of what is going on and knows that it is wrong. They would rather suffer impoverishment than be the one to report abuse. In fact, these same victims may refuse to testify against a relative who has abused them, even when these cases are prosecuted. Charges may not stick when the victim is unwilling to testify, unless there are independent records to prove the case in court.
It is as much a problem of our emotions and fears as it is of the wrongdoing itself. We somehow justify the actions, we look the other way or we fear what justice will do to our abusive relative.
I wonder, where is the anger at a crime against a person who is easily taken advantage of by the abuser? Where is the advocacy for the vulnerable person who is also our relative? Why are we remaining silent in this growing, $2.9 billion dollar a year problem?
I would be willing to guess that there is someone reading this whose client has a financial abuser in a their family or knows of a family where this has taken place. I urge you to speak up. To my knowledge, you can remain anonymous in your reporting, just as you can with any crime. Whether or not the criminal justice system can prove the crime is not your problem. It is your problem to carry the knowledge of financial abuse with you and to do nothing to protect the elder. One day it could be you who is victimized.
We are all encountering an aging population and the crime of opportunity of abusing elders is not going away. I am hopeful that we will show enough concern, enough responsibility and enough guts to do the right thing when we see a wrong that needs our attention.
As a financial professional, you may not be aware of what is going on in your elderly clients’ daily lives, but families sometimes find out about scammers who have victimized their loved ones. You could come across them too. An adult child of your client may mention a situation that is alarming or your clients may tell you themselves about this “great product” they’ve gotten. If it sounds odd, start asking questions.
Here’s an example:
According to the Waterloo Cedar Falls Courier, an adult daughter discovered that her aging parents were spending thousands of dollars on supplements to fix a wide range of health problems. The scammers were from Las Vegas based Leading Health Source, and they had taken advantage of the elderly couple’s vulnerability to their sales pitch. It might not have been so bad if they had simply sold the couple a reasonable amount of nutritional supplements. But over a period of 20 months Leading Health Source had ripped off the elders for more than $44,000, a sum they couldn’t afford.
This is the piece to which we, at AgingInvestors.com want you to pay the most attention. In this instance, the daughter took action. She went to bat for her aging parents, rather than doing nothing or considering it her parents’ problem.
Leading Edge was investigated after the daughter reported the large sum her parents had paid to them. The daughter had attended an event held by Iowa Fraud Fighters at Kirkwood Community College. Presumably, she learned there that she should file a complaint with the state Attorney General and she did so.
The outcome in this case was very good for the elders. The matter was settled, and the Attorney General’s office demanded that Leading Edge pay back everything the couple had paid to them. That meant getting a check from Leading Edge for more than $23,000 to start and having the remainder of the credit card charges reversed.
The Courier, source of this story reported that the Attorney General’s investigators found Leading Edge well aware that the people they were selling to in this case were easily manipulated. Their telemarketers’ handwritten notes indicated that the elderly woman involved had “memory” issues and that her husband had dementia.
What can you, the professional, just managing money or offering products to your aging clients learn from this?
First, note that memory issues and dementia in an aging couple is a setup for fraud and abuse. If you think your own client may have these issues, even a little, beware. You could be prosecuted if you proceed with transactions. If law enforcement is contacted or FINRA is involved, you will be scrutinized. It could be, in the above example that Leading Edge owners and principals didn’t know what their unscrupulous telemarketers were doing. Perhaps the telemarketers were motivated by a commission or other sales incentive and an easy opportunity presented itself with an easy sale. But the principals were held liable nonetheless. They either failed to supervise adequately or they looked the other way. They are consequently barred from doing business in Iowa.
The second thing to learn is that family of your client may be a very helpful asset to the ethical financial services professional trying to preserve capital for a client. Understand your client’s family relationships and whom to trust. When even a whiff of possible abuse happens, you can report it to the authorities. You don’t have to be right if you suspect something. You just have to be reasonable in what you think is reportable problem. It’s better to report it with the facts you do know and have it turn out to be a false alarm than to take the chance of not doing anything and have your client suffer the effect of theft and fraud.
Two ruthless swindlers were arrested in New York for tricking an elderly woman out of her multi-million-dollar property in Harlem she had owned for over 40 years.
A home care worker bilked a frail elder out of her life’s savings of $350,000.
These stories keep coming up. Family members do it. Salesmen touting unsuitable annuities do it. Realtors collude with thieves and they do it. Even lawyers do it. They prey on unsuspecting or impaired elders to rip them off.
Financial elder abuse is a problem all across the world and it’s growing. We need to be aware.
My mother in law, Alice, is 90 and still very sharp. She would be hard to fool, but I know the right thief could probably do some harm if we weren’t watching closely all that goes on financially. At least she has the good sense to question something that sounds too good to be true. Here’s an example.
She got a check in the mail for $3800, legitimate looking, advising that she was the second place winner of a sweepstakes in Canada. She does play various sweepstakes. All she had to do, of course, was to deposit it and “pay the taxes” on her “winnings”. She was advised to contact her “claims agent”. No doubt, that professional thief would have done a great job convincing someone unsuspecting to deposit the check and send “taxes”. Of course the check is rubber and the money is gone before the elder finds out that the check has bounced.
Classic scam. Alice called the number and said, “How do I know you’re legitimate?’ The thief told her if she was suspicious, she should hang up. She did. She then called my husband, Dr. Mikol Davis, who did an internet search for the phony address and told her she had just thwarted a thief. Alice is with it enough to question the check. Millions of seniors with any cognitive impairment are not so able to question things like this.
What we know from research into Alzheimer’s Disease is that one’s judgment about financial transactions may be the first thing to become impaired when the disease is in the earliest stages. “Mild cognitive impairment” as doctors may call it, is not so mild when you think about the financial damage that can result. And the elder with this early warning sign of dementia may be living independently, paying taxes on time and otherwise appearing socially normal. For a time.
Professional thieves have certainly studied what makes elders vulnerable. They buy names of people who have entered contests like sweepstakes, and troll for the isolated and lonely ones who will talk to someone on the phone. The sweepstakes officials get paid for selling the lists and no one cares what the buyer does with them.
Elders are truly sitting ducks, easy prey. Isolation, confusion, forgetfulness, and fears about running out of money can all drive the susceptibility to entering into a “deal” with a clever scammer.
If you have an aging parent or loved one with any form of mild cognitive impairment, early dementia or other disease that affects thinking and judgment, here are seven basic things family can do to reduce the risks of ripoff.
1. Check in often. If your aging parent lives alone this is crucial. One of my clients at AgingParents.com emails her dad every day to check in. Others call every day or close to it. Aging parents may not think they need this but they do.
2. Ask to be a co-signer on the main bank account in case of emergency. Some aging parents will agree and some will resist, but ask regardless. It will allow you to do online monitoring of the account activity. A “new friend” who gets money from them is a huge red flag.
3. Have your parent sign a Durable Power of Attorney appointing a competent and ethical agent, which could be you, a sibling or trusted other. If cognitive decline happens, the agent can at least get the money out of the account and put into another safer one that the impaired elder can’t access. This is one way to stop the thieves who are looking for impaired elders. Nothing in the account, no gain for them.
4. Suggest having your parent use a licensed fiduciary to handle money if they don’t want you to do it. If there are issues of not trusting you, an objective professional can protect them from abuse. You might do research to find a reputable one for them. This is also a safe bet for elders you know with no adult kids.
5. Provide and encourage parents’ connection to others. Think of isolation and loneliness as two big risk factors in why elders get financially abused. If you can provide encouragement for them to get involved in activities, it will make them less likely to want to talk to a smooth, slick “friendly” con artist on the phone. 6. Monitor who comes into your parents’ home regularly. Even the most trusted housekeeper, gardener, caregiver or bookkeeper can be tempted beyond reason when their own financial circumstances change for the worse. Your parents are all the more at risk when they trust the familiar person, who can use trust to exploit them.
7. Do background checks on any home care helpers who are hired to work for Mom or Dad. The cost is modest, and you can find out a lot: bankruptcies, poor driving records, and of course, criminal convictions and civil cases. Licensed home care agencies may do background checks, but ask to be sure.
The ripoff artists out there are both clever and relentless, but we can stop many of their opportunities. Please don’t take your aging parents’ financial judgment for granted. It can erode almost without notice, even in the brightest and most accomplished elders.
Most days at I get a call from an adult child of an elder, asking me about shady dealings over a parent’s finances. Sometimes it’s the niece, grandson, or other family member the caller is worried about. Sometimes it’s the caller’s sibling whose actions are in question. And all the cases I hear about have something in common: red flags of elder abuse are present, but no one is taking any action to stop them.
For example, a 62 year old woman whose mother is 90 called and said she is worried because she lives at a distance from her mother and her niece who is caring for the mother won’t return her calls or emails. And she also told me that a step-brother is a stockbroker and has financial power of attorney over her mother.
That’s 2 red flags, and she was just warming up. Most abusers are family members. Caregivers are next and professionals, like stockbrokers, lawyers, financial advisers and insurance brokers are next in line for frequency of abuse. I do all I can to educate and urge action by family members to stop abuse when it happens and when it’s suspected to get a closer look.
I recently saw a new publication from our government, designed to raise people’s awareness about financial abuse and what an agent should and should not do when acting as agent on a financial power of attorney document.
Elder abuse is a huge international problem, and it’s finally getting more attention from the Federal government, thanks in part to the Consumer Financial Protection Bureau. They came out with an excellent free little booklet to help folks understand how to handle someone else’s money when they get appointed as a Power of Attorney. It’s called Managing Someone Else’s Money: Help for agents under a power of attorney.
It’s clear. It tells you what you can and can’t do as an agent. If you’re interested in being honest, it gives your guidelines to keep it that way. On the other side of the question, unscrupulous agents use the paper as a license to steal. Unfortunately, no court is involved and no one is watching. They help themselves to an elder’s money, house, investments, and anything else of value and some seniors are left destitute. I believe that sometimes, education can help family members stop other family members from committing this abuse. They can also warn the elder who is living independently about the sneaky thieves who devise ways to get elders’ money that are not so obvious. The booklet warns about some common scams. Not everyone knows about these and they keep getting victims to give up money.
The booklet lists 10 scams. I’ve picked a few to reiterate here for you. Would you know about these if they were going on with your elder right now?
1. Relative in need. Someone pretending to be a family member or friend calls or emails and says they are in trouble and need the elder to wire money right away. And by the way, you don’t have to be frail and isolated to get one of these pitches. I got one myself recently. Someone had hijacked my sister’s email address and sent emails to all of her like named contacts asking to wire money to her in a foreign country. Didn’t work with me, but it does get people to wire money to thieves. If no one fell for the scam they would stop, but it goes on.
2. Fake government funding. The recipient gets an official looking letter from a pretend government agency offering help with housing, home repairs, utilities or taxes. Just give them your credit card info and you get the help. Vulnerable and low income seniors fall for these scams because they are worried about the very things the ripoff artists offer them.
3. Home improvement. Targeted elders who own their homes (can be easily found in public records) are approached with an offer to fix something. It can be a roof, a fence or in my mother in law’s case it was to clean the air ducts. They take money in advance, overcharge and do shoddy work, or don’t do the work at all. The trusting elder doesn’t have a way to pursue them, as they disappear.
The booklet is 23 pages and has two pages of resources listed a the back. Among them are Adult Protective Services, and where to get free legal help for seniors. I think they did a fine job on this. Maybe that’s not the way I would comment on a lot of other confusing or poorly written government efforts at educating the public. And they don’t teach you this stuff in school. My hat’s off to the CFPB.
If you have an aging parent or other loved one, or you’re curious because your aging loved one put YOU on the documents that will one day cause you to have to handle their money, check out the booklet for yourself. I’m happy to share the good resource with you. Yep, your tax dollars at work.
Financial advisors can spot and do something to prevent financial elder abuse. Advisors are in a unique position to observe their clients over years, sometimes decades. Knowing a client well gives them the vantage point to understand their clients’ normal general life situations as well as their patterns of using their accounts, which can make them well positioned to spot red flags and any unusual activity.
As part of the national legal community dedicating time to the protection of vulnerable elders I see communications from lawyers all over the U.S. with complaints that Adult Protective Services are not taking financial elder abuse seriously enough in many places. When it is reported, APS may dismiss it as “a civil matter” in which they have no interest. APS is essentially an investigative help to the criminal justice system. It can intervene when an elder is in physical danger. Social workers and investigators from APS look into reports of abuse and help the DA determine whether there is evidence sufficient to prosecute a crime. If the matter involves the undue influence of a family member and the elder seems willing to give away money, even if duped into doing so, APS is unlikely to take any action.
Financial advisors cannot rely on the their local community’s APS to protect their clients when abuse is suspected. Particularly in the case of family, close associates, and caregivers, APS may not wish to interfere unless or until an obvious crime has been committed. Many of these abusive situations are not so obvious, or the elder appears to be willing to give away his assets, and he may not see that anything is wrong. it is up to others to work to stop the abuse, including financial advisors, who may be in a highly trusted position with the elder.
The financial services industry, generally, has avoided certain kinds of communication with family of aging investors due to privacy laws, concerns which they interpret as precluding them from sharing financial information. I do not agree that privacy should stop advisors from communication with family when an elder clearly needs protective action. There is a way around the privacy question. Policy can be created to obtain permission from every client to communicate with a family member or trusted other appointed to step in when the advisor (and compliance) have reasonably concluded that the elder is being taken advantage of financially or otherwise.
If you see something, say something is what we are supposed to do to stop terrorist attacks. It is also what we need to do to stop elder financial abuse. The financial industry needs to develop new, forward looking, senior specific policies to address the rampant problem of elder abuse.
Here at Aging Investor, we are doing our part to help by developing educational materials for industry professionals. We want every professional to recognize the red flags warnings of potential abuse, to understand diminished financial capacity and to how to get the necessary document in place around the issue of privacy. Aging expertise from outside the financial services field is needed for all of these points. I hope all advisors, their compliance departments and organizational heads will pursue what FINRA has urged on you since 2008: that senior-specific policies be put in place to stem the rising tide of elder financial abuse of their own aging clients. We offer resources such as our CE courses and have written a book to help you better understand and manage your aging clients.
Until next time, Carolyn Rosenblatt AgingInvestor.com
There is a buzz going on about the problems financial professionals are having with clients who are aging and losing capacity for financial decisions. It directly affected Kathleen Pritchard, head of business development at Legg Mason.
Her father-in-law was diagnosed with Alzheimer’s disease at 73 and she and her husband approached the father’s financial advisor for help. He had been managing an estate worth over 8 million dollars. He said,
“I basically don’t do any of that. I just manage your dad’s money.” (more…)
Your elderly clients are ripe for scammers to pick. How is it that these clients, some very intelligent and accomplished, fall for these obvious ripoffs?
In a typical example the U.S. Attorney’s office charged six defendants in a fraud scheme targeting the elderly .This time it was a lottery scam involving theft of a total of $400,000 from various victims. . We see these reports often in the news, to the point that they seem very repetitive. The characters and the amount of money stolen from elders changes but the methods are the same over and over. Other scams bring in millions from their vulnerable victims. The thieves in this case were caught. Most are not.
Why do elders fall for these things? Why don’t they get that the “Nigerian prince” or the “Jamaican Lottery” are clearly bogus and not to be trusted? Isn’t it obvious?
There are various reasons why elders are such easy prey for these thieves. One root cause is isolation and loneliness, a fact of life for many seniors who are not closely monitored by loved ones. A pleasant, slick professional calls on the phone in a friendly and engaging manner and traps the vulnerable elder with kind words, attention and a feeling of connection. The thieves are trained and smart. They smell the kill. They know exactly what to say to get the elder to trust them.
Another very important factor isdiminished cognitionin the elder.The crooks know that if they have a thousand names purchased from magazine subscribers, U.S. lottery or state contests and they know the ages of those on the list, that their chances of finding victims are excellent. Some of the elderly on the lists will be just impaired enough that they can’t see a scam coming. At least a third of those aged 85 and above have dementia in some form. Scammers simply buy the lists and start calling. And there are no restrictions against selling the names and personal information such as ages, phone numbers, addresses, etc.to the highest bidder. They can acquire the name and age of every subscriber to The Reader’s Digest, for example, providing fertile ground for seeking victims. Research into the impairments of Alzheimer’s Disease tells us that financial judgment may be the first kind of judgment to erode, and it is not obvious at the beginning stages, though the impairment is significant.
Another reason why seniors fall for these ripoff schemes is that they feel financially insecure. If there is a downturn in the market or whatever investments an aging client holds, he may feel a need to get easy money or a high return, and when a con artist offers that, he’s likely to fall for it. The right combination of loneliness, isolation, early dementia and fear make him an easy target.
Can you do anything about the problem?
I think you can. If you do care about your aging clients and want to remain a trusted advisor, a first protective step is to be aware of the risk of scams targeting the elderly. At AgingInvestor.com, we recommend developing a policy for all aging clients that includes staying in more frequent contact with them than you are required to do. Here are 3 things that sort of policy might include:
1. Schedule monitoring of how the elderly client is doing in general on a regular basis, the frequency of which you determine by thoughtful planning. (Quarterly? less often?) Check in by phone. Reassure your client when investment losses happen, and ask how he’s feeling and what he’s doing in his personal life. This does take time, but it can be very helpful to renew the client’s trust in you and remedy somewhat the feelings of isolation that can accompany aging.
2. Pay particular attention to recently widowed aging clients. The aftermath of loss of a spouse can be a dangerous time because of grief. That makes people vulnerable to begin with and when you add some cognitive impairment to the mix you can see that thieves love the opportunity to cultivate these elders. Consider that deaths are public records and that scammers can easily collect lists of the recently widowed to pursue with their bogus offers. They may start the conversation by expressing their phony empathy for the person’s loss and work on a relationship after that.
3. Educate your client. She may have heard of scams and have a vague understanding of how they work, but not be ready to spot one when the phone rings with any scheme to defraud her. If you provide a respectful reminder, using a recent story of elder abuse by scammers published in news reports, which you can easily find any time, you just might cause your client to think twice before becoming engaged in conversation with a stranger who seems so nice and friendly. You can do your part to help your aging clients to beware of phone calls, contests and unknown people asking for personal information or money.
My mother in law, Alice is still quite sharp at age 91. Someone tried the “lottery winner” scam with her too. She called the number on the letter from the “Lottery Authority” and asked how she would know if they were legitimate. The accented voice on the other end of the call said “well if you think this is fake, you can hang up.” So she did. End of scam. Not all 91 year olds are so alert. Given that, the financial advisor may be one of the few trusted people in a position to help them create a line of defense.
If you know someone who seems to have the same issues as Gertrude, you will be interested in Chapter 10 of my book 
You’d think that after all our vets have sacrificed for our country that somehow slimy manipulators wouldn’t go after them specifically. But, sadly, vets are prime targets for so called “veteran’s advocates”, whose objective is to get their money. Here’s how they work:
Competition for clients has always been there, but as investors age, something you might not have anticipated can happen. The vultures are out there. Competition with you for their invested assets can become an increased threat when an older client’s judgment is compromised. With impaired judgment, they might fall for the “free meal” seminar, a device to get them to buy an inappropriate product.
