Beware: Seniors Subject to Fraud
"An estimated one in five older Americans have been financially exploited," according to an article in Barron's, describing the situation as an epidemic. While seniors are subject to a variety of scams, the majority of financial abuse "comes at the hands of family members, friends, or caregivers improperly using a retiree's money." In fact, "AARP found that financial exploitation by family members involves larger sums than those by strangers."
A common example is when an adult child is being compensated for the time she spends caring for an aging parent. Eventually, the child begins drawing additional funds for herself because she "deserves" it. An open conversation with the other siblings or family members can help provide transparency. Requiring more than one person to engage in, or review, financial transactions on behalf of seniors also helps.
It is important to be aware of the warning signs that someone you know may be vulnerable:
- A change in regular habits; failure to care for self
- The appearance of a "new friend"
- A previously uninvolved relative, caregiver, or friend begins making decisions on the aging person's behalf
- Increased isolation from family members and professional advisors
- The exhibition of erratic behavior -- unpaid bills, new spending patterns, significant changes in investment strategy, changes in professional advisors, unexplained asset transfers
- Financial transactions that benefit others, not the person in question
Financial advisors can play a key role. They are often one of the first to see these warning signs. But your advisor may be limited in what he can tell others about a client. Accordingly, I will be asking my clients in the beginning of next year to authorize me, if they are willing, to contact family members or trusted professionals if my team notices behavior that warrants concern about a lack of capacity to adequately handle their financial affairs. I can attest from experience that early preventative measures can pay off.
Words of Wisdom
You know you're getting old; there are certain signs. I walked past a cemetery and two guys ran after me with shovels. -- Rodney Dangerfield