In last month's column, I asked to what extent financial planners had seen elder exploitation and asked if anyone would share their stories. This month I want to share some of these situations and point out a few themes.
Planners who attempt to help are clearly frustrated with the inadequacy of options and services. For example:
Last year, a person whom I had known for years came to me to prepare his returns. I had not seen him in many years and was shocked at what I think are obvious signs of dementia. During the interview he mentioned borrowing a substantial amount of money on his home and loaning it to a needy veteran that was making some type of claim and would be paying the money back soon. I was very concerned about this situation. I contacted the AICPA and our state board of CPAs and did not receive an adequate answer. I am in a dilemma as to what to do.” — RH
Or this story:
Husband has a stroke and loses his judgment faculties. Husband starts soliciting prostitutes at their home and his mother's residence. Husband acts in other ways showing very poor judgment. Wife obtains a judgment protecting her “share” of all of the assets, some of those being a portion of her husband’s retirement accounts. Husband now has his assets segregated. Wife has told me that prostitute activity has remained constant and that he wants to withdraw his funds to loan to those prostitutes.
I contacted my B/D legal and compliance department about the situation and was told by them that without a conservatorship or similar judgment, I am required to do what the husband requests. Husband now has withdrawn the majority of his retirement account. I have little doubt all of his assets will be gone soon. — CS
I received several notes decrying how some firms basically ignore the issue, like this description:
I have dealt with everything from an insurance agent 'friend' who moved in with an addled recent widow to sell annuities, to a client who drained her substantial retirement funds over six months taking a weekly bus trip to the local Indian casino. The first ended well with the court getting involved due to her daughter's vigilance, but the second ended with what was left of her account being sent to be covered by our call center. In both cases, I was told by my large wirehouse compliance officer that there was nothing we could do. — TM
Government entities can be just as unhelpful.
In January 2006, I tried to help the elderly parents of a client, to whom I believe were sold an inappropriate annuity by an insurance company agent (86 years old, put in contract with high surrender penalties when clearly they needed cash flow).
The State of New Jersey responded to my client’s parents in a letter that the “Statement of Understanding” which they signed, and contract, indicated that they were given proper legal notice. The letter also said, “the New Jersey Department of Banking & Insurance is an administrative agency and is not empowered to overturn the terms of your contract.” It suggested legal action.
From this experience I learned that, at least in this instance, the insurance company and State of New Jersey had no interest in correcting this wrong, and only legal action, which was beyond the means of this couple, might have worked. They were financially naïve and easy prey for the agent. This process was beyond their financial means and level of energy at their advanced stage of life. And so the abuse continues.
I did all I could do, with no relief for two unsuspecting targets. — DH
Let us not forget that nonfinancial assets can be targets as well.
Our firm deals exclusively with the documentation of nonfinancial assets of every type. Imagine the disappearance of single (or a few) items from a collection (no one will notice ... ) or some small items of unusual value like jewelry. These events may ultimately destroy entire family relationships with suspicion and hatred for their dishonesty. — JM