Protecting Against Financial Elder Abuse

Part of our job as an advisor is advocating for our clients.  This includes being alert when it comes to the financial exploitation of our elderly and at-risk clients. It has become more important than ever for us, our clients, and their families to be vigilant against the growing problem of financial elder abuse.  One way to fight this type of abuse is to bring it into the light by providing information about it and ways that you can protect yourself or a family member who is at risk.    

It is estimated that over a third of seniors in the U.S. have been the victim of some type of financial exploitation.  This percentage is likely to increase as the Baby Boomer generation ages and becomes a large target.  You may think that robocallers and scammers are the biggest threat to an aging and at-risk population.  However, according to the National Center on Elder Abuse, family members are much more likely to take advantage of a parent or relative who is at risk or with diminished capacity.   

Not only are the statistics alarming, the question of whom you can trust is unsettling.  There are ways you can protect yourself and your loved ones against financial abuse and fraud.     

Avoid robocalls, spam, and “spoofers”: 

About those robocalls and other scammers, if you do not recognize the person on caller ID, do not answer the phone.  Your phone provider may offer a caller ID app to download on your phone to help identify Robo and potential spam calls.  Spoofing is when a phone call is disguised by appearing to be from a trusted source.  For example, you may see a call from a number that appears to be local or the call appears to be coming from a company or government agency.  You may even receive a call that appears to be from your own cell phone number.  Be careful!  It could be that a scammer is attempting to steal information about you.  Let any questionable phone calls go to voice mail and decide later, after listening to the message, if they are legitimate.  If a government agency, such as the IRS or Social Security Administration, needs to contact you, it will send the request through mail.  See the Federal Communications Commission’s website  for more information.  

Consider establishing a trust and a financial power of attorney. 

Establishing a revocable trust will allow you to name a fiduciary and define who has access to your trust assets.  Powers of attorney may be useful if help is needed with financial and medical decisions.  Contact an elder law attorney for help with drafting these documents. 

Set up trusted contacts on financial accounts. 

We recommend that clients provide trusted contacts on existing accounts and any time they establish a new account.  These contacts do not need to be family members.  In fact, adding at least one person of trust outside of the family is recommended to guard against abuse by a family member.  The financial advisor will then be able to talk to the trusted contact if the client has a questionable request, or the advisor notices unusual behavior.  Providing trusted contacts allows an advisor to protect a client without the risk of breaching client confidentiality and privacy laws.  We recognize that adding a trusted contact has issues of its own, so be careful whom you add.  Do not let anyone coerce you into adding him/her as a trusted contact if you have any reservation about motive. 

Include a financial advisor in the key support team. 

Isolated seniors are at the highest risk of financial abuse.  Building a social circle and a network of trusted people, organizations such as the local senior center and Meals on Wheels, and a financial advisor may help to prevent financial elder abuse.  An advisor can be a significant deterrent to financial abuse and fraud.  Not all advisors are held to the same fiduciary duty of care.  As a Registered Investment Advisor, the fiduciary duty of care requires looking after a client’s best interests and protecting his or her wealth.  By having a more personal relationship with a client, an advisor may be more likely to spot unusual behavior from a conversation with a client and identify suspicious activity within a client’s accounts.  In addition, tight measures are set in place at the custodian (i.e., Schwab) level when it comes to fund transfers and address changes to help prevent unauthorized access to the client’s accounts.   

Regulatory agencies are taking notice of this growing problem and are providing advisors with tools to protect clients at risk.  The Senior Safe Act was passed on May 24, 2018.  This law encourages financial professionals to report suspected financial exploitation and allows the advisor to delay a transfer of funds if the request raises red flags of potential exploitation, such as an unusual request to transfer or wire funds to a third party.   

Other suggestions. 

There are many other ways to protect yourself and your loved ones from financial elder abuse.  Below are a few other suggestions: 

  • Do not set up joint accounts with a family member or person of trust. 
  • Freeze your credit with the 3 credit reporting agencies.   
  • Do not sign your home over to a family member or person of trust if you move into assisted living. 
  • Establish online access for all accounts and review them often. 
  • Shred all receipts that include your credit card number. 
  • Sign up for the “Do Not Call” list. 
  • Add verbiage to your voicemail message informing that you screen calls.  
  • Introduce your center of influence, including your advisor, to your family and trusted contacts.  
  • Have your benefit checks (such as Social Security) deposited automatically to your bank account as opposed to receiving physical checks in the mail. 
  • Do not give your personal information, including passwords, to unsolicited callers or door-to-door salespeople or charities – no matter how convincing.  

If you suspect financial elder abuse, contact local law enforcement and Adult Protective Services. 

Please contact us with questions you may have about a loved one’s situation.   

 ~Karen Didde, CFP®, Wealth Manager
Elder Abuse is Real, Here’s How to Protect Your Money, John E. Girouard, Forbes, March 22, 2019