Detecting Financial Exploitation of Mom or Dad

Stories of the financial exploitation of senior citizens are not rare.  It is often the result of a senior’s friend, relative, or caregiver building trust and then taking advantage of and financially abusing the senior. Abusers might take control of accounts and credit cards to “help” the victim.  Predatory strangers might contact a victim by telephone, email, or U.S. mail, never actually meeting with them.  Scammers offer cash prizes or tax help or awards by preying on the senior’s gullibility or loneliness. In my 30 years of business, I’ve personally seen it all. Examples include stockbrokers churning lonely ladies accounts to increase their commissions; U.S. Mail scams where the senior was sending in money to collect a “million-dollar prize;” and caretakers taking extra withdrawals from a client’s bank account at an ATM. I even remember meeting with the daughter of an elderly gentleman who had hired a young female caretaker.  Over a matter of only a few months, she was able to convince him to change his will and name her as the beneficiary of his estate.  She disappeared soon after collecting the money, and although the daughter sought legal help, she could not prove that her father was not competent or under any undue influence when he changed his will.

My column last week gave some examples of how you might be victimized by an unscrupulous financial advisor. This week, I’ll tell you how you can watch for abuse by following the process honest financial advisors use to help elderly clients avoid being exploited. In a new working paper from the Pension Research Council at the Wharton School, University of Pennsylvania titled “Aging and financial Victimization: How Should the Financial Service Industry Respond?” the authors investigated the protocols of various wealth management firms. As I read this report, one protocol stood out. .This 5-step process clearly defines the issues involved, and may help you understand what behaviors to be aware of in observing your elderly loved ones and how to intervene if necessary. Although the cited protocol was described for advisors, I am paraphrasing it and adapting it for family and friends..

The five steps follow:

1.  Observe: Notice unusual patterns or changes in the senior’s behavior. Are there recent                changes in their health or mental status that may explain the unusual behavior? Is a                    stranger accompanying them to meetings, coaching him or her over the phone, or overly          interested in Mom or Dad’s financial affairs?
2.  Question: Be proactive and question these unusual behaviors. For example, why is Mom or        Dad suddenly withdrawing large amounts of cash? Who is the unknown third party that will      receive the funds?
3.  Negotiate: Try to convince Mom or Dad to slow down and delay the transaction until you          have time to investigate what is going on.
4.  Isolate: Be sure to speak with Mom or Dad alone, and not in the presence of a caregiver or        other person who might be influencing them.
5.  Report: If your investigation, or even your suspicions, lead you to conclude that Mom or Dad      may be being exploited or victimized, report your concerns to Adult Protective Services            and/or the local law enforcement agency

Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment advisor and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to