The holiday season often brings together family and friends that don’t see each other very often. This presents an opportunity to help stem the spread of an unfortunate epidemic in the U.S., namely the proliferation of financial fraud and exploitation of our elderly. In addition to discussing the implications of the “fiscal cliff” tax code changes and other year-end matters, we can do a great service by discussing some ways to protect the elderly from financial fraud and exploitation.
While approaching the subway in Barcelona a couple of years ago, my family and I witnessed a pickpocket attempting to lift a wallet from the back pocket of a man a mere five feet in front of us. The man detected the thief, but before he could grab the perpetrator, the thief fled. Based on what he shouted, the near victim was clearly a local.
When I’m on vacation, I’m a tourist and sadly look the part with camera and kids in tow. The pickpocket did not try to take anything from me or my wife or children and there was a reason for this. Most thieves would prefer easy targets to difficult ones. We’ve traveled the world and to some notorious havens for theft from tourists, like the Circumvesuviano train that runs from Naples to Pompeii, without ever having anything stolen, knock on wood. We pack things up pretty tight, hold our bags, packs and purses securely, don’t keep valuables in accessible pockets, and are attentive to what’s going on around us.
All of us have elderly neighbors, elderly clients, and younger clients with elderly parents. As life spans increase, elder fraud issues will become more significant. A good defense against elder fraud has similar qualities to thwarting pickpockets—create an environment where activity can be observed.
In this age of digital communication, we can know more about the lives of people across the country than we do our next door neighbors. With your clients who are visiting their elderly parents, encourage them to take a minute to meet the neighbors. They need not impose upon the neighbors to become caretakers of their parents, but they may find someone willing just to take notice of who comes and goes from the house and would be willing to pop by to say hello and observe.
Variations of classic scams are repeated over and over. Some nice young man knocks on the door to say he had done some work down the street and noticed a loose gutter. The homeowner thanks him at which point he says, “You know, I finished that other job quicker than I expected and I have all my equipment. How about I just secure that for you? No charge.”
“I couldn’t let you do that,” replies the homeowner.
“It's no problem and will only take five minutes.”
When he’s done, he mentions a problem that at some point will need to get fixed. No worries for now. A couple of weeks later, he is back “in the neighborhood” and offers to check on the problem. It is worse, but fine for now. At some point, he visits and declares it time for repair. The elderly homeowner, now dealing with a friendly familiar face, approves the repair. The nice young man spends time on the roof making some noise and collects his fee. The homeowner doesn’t know there was never a problem with the roof.
A simple question from a neighbor, “You getting some work done?” can start a conversation that might reveal a lack of bidding or a lack of communication about the matter with far away family. A scammer won’t place a bid and a legitimate contractor won’t conduct unneeded repairs.
Financial planners can do a lot of things to help secure the financial belongings of the elderly. One key to doing this is transparency. With so many family members spread across the country these days, it is difficult to see what is happening physically at a particular location. However, it is easy to provide viewing privileges or access to information about a financial account to multiple people, regardless of where these people reside.
It is usually a simple matter of establishing proper authorizations for all of the siblings in a family to see what money is coming in and out of mom’s account. There is some potential, to say the least, for squabbling siblings to derail this process. However, these days we are finding that even in families where siblings do not get along well, they are aware of the reality of the potential for fraud and are generally receptive to the idea of open books. Mom often is aware that keeping up with her finances is increasingly difficult and is open to the idea, too, typically as long it is clear she can still call the shots for as long as she is able.
Sure, in some families this discussion will go nowhere, but most families will benefit from giving them the chance to set their disagreements aside for a time to make sure that mom is protected. Having the conversation can also deter the most prevalent exploiter of all, one of the kids.
Most financial planners have had the experience of working with a widow who, after her husband passes away, is being hit up for cash by one of the children. We can help establish trusts to control funds so troubled family won’t squander assets, but the simple act of getting more family eyeballs on the situation often keeps children from even asking mom for funds the child would never have asked of dad. With more people involved there is, of course, a greater potential for conflicts of opinion, but to me the lower potential for exploitation compensates for the discomfort.
Discomfort is a good word to use. In conversations with colleagues, the very idea of having these kinds of conversation makes them uncomfortable. I want to encourage my peers to, well, get over it. Financial planners can play a huge role in improving the security of our elderly by simply doing a good job and encouraging better communication among a family.