Oct 3, 2014 | aging, diminished cognition, elderly, scammers
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.
You can get it here: http://files.consumerfinance.gov/f/201310_cfpb_lay_fiduciary_guides_agents.pdf.
Here’s what I like about this booklet.
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.
Until next time,
Carolyn Rosenblatt
Dr. Mikol Davis
AgingParents.com and AgingInvestor.com
Aug 15, 2014 | aging, aging investor, elder investor, elderly, investor, senior citizen investor, senior investor
Doesn’t every financial advisor want to stand out from the crowd? Be better at delivering services? Somehow get a reputation as a cut above the average guy or gal in the biz?
If you are seeking to distinguish yourself, you can. The secret is not in getting better returns, finding unique ways to protect assets or getting it right with your investment strategies. It’s in offering a different service from the other guys in addition to doing all the money management, usual things well.
The different service we’re talking about is looking at your older client’s age, making a plan to look at all the aspects of their lives that are likely to change as they age and being an educator and advisor to help them plan for those things. This is not limited to figuring out how much your client will need in retirement. It goes way past that, and the issue of housing. Yes, your role as advisor will go beyond financial matters into the personal and the so called “soft skills’!
Does this make you uncomfortable? “I just manage money” you may be thinking. But the financial picture is connected to the person, who is usually connected to a family. The finances are not in a vacuum with no relation to an investor who is aging, and her needs as she gets older and may lose her ability to make sound financial decisions. This is not about merely preserving assets and making the money last. People are of course affected by the aging process, which brings with it risks. One of those risks is dementia and loss of financial capacity for accepting your advice. What then?
“I’ll worry about that when my client gets old” you say? The problem with that thinking is that you don’t know when your client is “getting old”. Dementia is a sneaky brain disease that usually develops over years. The signs are subtle. And dangerous. The risk of Alzheimer’s Disease, the most common kind of dementia doubles every 5 years after age 65. 5.2 million people already have it. Lots more are expected to develop it as Boomers age. One day, as you avoid conversations about possible loss of financial capacity, you may find that it is too late to get your client to sign anything, agree to anything, or worse yet, that he is a victim of financial abuse.
If you truly want to stand out as an advisor, not just for being a great producer, but for offering cutting edge service, get the training you need to make that service include skill in addressing and anticipating possible loss of capacity in your clients. Get the right document in place to protect your client and protect yourself from regulatory questions about privacy.
If you are considering this suggestions seriously, visit us at AgingInvestor.com and sign up for
one of our online courses. We’ve got the aging expertise you may not have yourself and you can get a lot smarter about aging clients as you get some training.
Meanwhile, think about becoming a unique service provider who is branching into an area no one can avoid: our populations is living longer than ever. You are in a great position to be a forward thinker about aging issues with your clients as a part of your work. You can take pride in it.
Until next time,
Carolyn Rosenblatt, RN, Attorney
AgingInvestor.com
Aug 4, 2014 | Alzheimer's disease, diminished cognition, elder investor, elderly, investor, scammers, senior citizen investor, senior investor
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 is diminished cognition in 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.
Would you like to develop a policy specifically geared toward keeping your aging clients and keeping them safe from abuse? Get expert help with policy development and implement it with training at AgingInvestor.com.
Until next time,
Carolyn Rosenblatt
AgingInvestor.com
Aug 1, 2014 | aging, aging investor, Alzheimer's disease, senior investor
As just about everyone was outraged and offended by Donald Sterling’s racist comments, you might wonder how there could be anything to learn from what he said and did in the time that has passed since his story first broke.
To some people, Donald Sterling seemed rational. A horrible racist, but being that way in control of his faculties and choosing to do what he did. Was there something wrong with him or was he just being his racist and unreasonable self? I think his conduct is a good example of how a cognitively impaired person can seem logical and in control one minute and totally out of control the next. And he is an example of how an impaired person can destroy his chances, make bad decisions and have a massive loss. You just might find yourself with a client like that.
Here’s what I mean. Donald Sterling’s comments led to his wife insisting that he be examined by two doctors, psychologists. Both concluded that he had Alzheimer’s Disease. When you saw Sterling on TV, you might have thought, “well, he seems weird, but he apparently knows what he’s doing”. Did he?
A person with Alzheimer’s lacks judgment about finances. That issue was at the very heart of the case when he agreed to sell the L.A. Clippers, and then changed his mind and tried to block the sale in a court battle with his wife. Some might be skeptical about the diagnosis of Alzheimer’s. After all, two billion dollars was at stake and fights over anything that big can bring up just about anything.
But notice this: if you want to win in court, you are going to put on your best behavior. If a judge is looking at you to make a decision about whether you are financially competent or not, you’re not going to do anything that would lead the judge, holding enormous power with his decision, to rule against you. That’s what a reasonable person with ordinary good judgment would do. Even if you’re mad as hell, you’re not going to lose it and prove to the judge just how out of control you are. But lose it is exactly what Sterling did with his chance in court.
Imagine that someone with that much money would hire the most highly skilled lawyers possible. Imagine that they were ready with all possible evidence to refute the allegations of Sterling’s wife that Donald was not competent. And what did he do? He behaved erratically over several days of testimony. He raised his voice at his own lawyers and those opposing him. He called his wife a “pig” in court. In other words, he could not exercise enough good judgment to do what any reasonable person would do in his circumstance. H could not rein in his impulses. He blew it.
Of course, the judge ruled against him. He was found to be incompetent to make a decision to stop the sale of the Clippers and his wife won out.
The lesson here is that people who have dementia, the major symptom of Alzheimer’s Disease, lose their judgment about finances. They may make bad decisions against your advice. They may behave erratically. They may act out one minute and be apparently fine the next. When you have a client who has a history and a pattern of making certain kinds of choices about how to invest his money, and he begins to divert from that, you know it is a red flag that something may be wrong. You know that he could lose his wealth if this keeps up. What are you supposed to do?
Other than escalating the problem to compliance sooner or later, you may not think there are any choices. But we at AgingInvestor.com believe there are choices about how you are going to approach and deal with these problematic clients, whether they are as extreme as Donald Sterling or not. There are options for anticipating the realistic possibility that your clients who are aging are going to become cognitively impaired. You can create innovative policies to manage them in a proactive way, involving family, involving significant others, and complying with privacy considerations. You don’t have to fire the client and lose the assets under management. If you have a clear path that enables you to take protective action and engage a third party whom the client has identified and appointed far in advance, you may be able to work with the appointed person and continue to carry out the wishes and philosophy of your client even if he becomes impaired. We are here to help you craft those policies and we empower you to implement them.
This process can change and disrupt the old, outmoded ways of dealing with our aging investors. It’s radical. It’s different. We think it should be done. If you would like to explore this for yourself or your organization, contact us today at AgingInvestor.com for a preview. We will help you become a change agent and an innovator.
Until next time,
Carolyn Rosenblatt
Jun 12, 2014 | aging, aging investor, Alzheimer's disease, investor
Alice, The Unsophisticated Investor
Alice, my mother in law, is blessed with a great memory and pretty good health for a woman of her age. She works at it. She’s been a widow for 6 years now. Dad always handled their finances. Since she’s been on her own, she relies on her two adult children and an accountant friend to guide her about her investments. She was referred to a financial advisor known by a family member. She thought things were fine until a year went by, the market was doing well and she had no gains at all in her portfolio. She’s comfortable, but not wealthy by most measures. There is enough to take care of her, though full time care would eat up a lot of what she has. Luckily at this time, she is able to remain independent.
When She Discovered The Truth
Alice decided to change financial advisors. It was then that she learned, to her dismay, that her other advisor had done something that really got her angry. He had taken 10% of her investable assets and put them into a real estate investment trust (REIT) that could not be liquidated without a substantial financial penalty to her. She is not savvy about complex investments and relies on others for advice. She relied on her advisor a lot. She is clear that she needs to watch out for herself. She says the advisor never told her what he was doing with this investment and never explained that she would not be able to access the funds if she needed them unless she suffered a loss, in the form of a penalty. He, of course says he told her all about it and she agreed. She doesn’t believe him. My husband, Mikol, interviewed her about this and put it on YouTube. Here’s what Alice has to say. http://tinyurl.com/pmqf3j2
In the July 14, 2013 InvestmentNews, Dan Jamieson reported that the Financial Industry Regulatory Authority and the state regulator in MA are cracking down on exactly the kind of nontraditional, illiquid investment the financial advisor chose for Alice. Mr. Jamieson reports that In February, Massachusetts settled a case against LPL, which agreed to pay at least $2 million in restitution and $500,000 in fines related to the sale of nontraded REITs.
State regulators in Massachusetts settled their cases against five high profile firms who agreed to pay a total of $6.1 million in restitution to investors, and fines totaling $975,000.
FINRA CRACKDOWN
State regulators aren’t the only ones cracking down on alternatives.
FINRA also warned members in 2012 in its annual exam priorities letter that it was “particularly concerned about sales practice abuses [and] yield-chasing behaviors” that might lead investors into unsuitable complex products.
Products under scrutiny by FINRA in 2013 included business development companies, structured products, nontraded REITs and private placements.
“Finra grinds us on structured notes and commodity-linked notes,” said the president of a broker-dealer organization, who asked not to be identified.
The regulators are reported to have found out that in the REIT cases, people didn’t know what they were investing in. We think that is true for Alice. We also think her advisor, knowing her lack of sophistication, took advantage of her for the sake of his commission. His justification is that “she didn’t need the money” and that “she was investing for the benefit of her heirs”. Her family, particularly her son, thinks that is rather arrogant of him. How does he know whether she’ll live to be 100 and whether she will need the money? Furthermore, Alice is not investing “for the benefit of her heirs” when she is relying on her funds to take care of her own needs for the rest of her life.
What We Did
As soon as we found out about the REIT sold to Alice, then 90, and how illiquid it was and for how long, we confronted the advisor with a letter and sent him a copy of the Investment News article. He called shortly afterwards. He tried to justify his actions, but was told very politely by my husband that Alice was to get full restitution or a FINRA complaint would be promptly filed.
Permission of various kinds had to be obtained. The advisor had left his firm and gone with a large bank. This messed things up for him for a time, but I thought he deserved it. This was the threat of a claim. Two lawyers called and argued how great the investment was. We held our own and continued to insist on full restitution for Alice. More excuses. Months of lawyering and letters later, she got full restitution. You’ve never seen more butt-covering letters from them.
The lesson here is to be smarter than this guy was. It’s not that the investment itself was bad. It paid a decent return. It’s that at her age it was clearly unsuitable. So keep the age of your client in mind and don’t make dumb assumptions like, “she didn’t need the money”. That is a foolish statement for anyone to make about a 90 year old with a relatively modest portfolio who could need hundreds of thousands of dollars of care as some seniors do before the ends of their lives.
If you need private advice about any aging client whose behavior makes you question the client’s financial capacity for decisions, call us. We have the expertise to help you assess the client’s abillity and we can guide you.
Don’t wait for FINRA to come knocking.
Until next time,
Carolyn Rosenblatt, RN, Attorney, Mediator
AgingInvestor.com
So, when you get this properly written, be sure that you have garnered about proofreading and editing services 10 points.
