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There are a plethora of unique ways in which advisors can add considerable value for clients and no, that doesn’t mean boosting portfolio performance. In fact, some of these value add ideas extend beyond the advisor “norms” of estate planning, life insurance, portfolio construction and the like.
Those include helping clients with budgeting and credit issues, among others. For advisors with a lot of baby boomer and older clients – likely a significant amount of advisors out there – elder financial abuse is an issue those clients and their children need to be aware and it’s an area in which advisors can add considerable value. Obviously, the notion that there are nefarious people and enterprises out there intentionally targeting older folks for the purposes of financial exploitation is negative, but the good news is that the issue is getting more attention in mainstream circles.
That implies that if seniors themselves aren’t aware of various financial scams aimed at them, there’s a reasonably good chance their children are aware of those issues and that makes it easier for the advisor to broach the subject. It’s a conversation worth having. Just last year, folks over 60 years old logged 100,000 complaints for a combined $3.4 billion in losses attributable to scams, according to the FBI.
Advisors can help older clients avoid becoming victims of financial fraud in a variety of ways starting with identifying some of the most common rackets.
Know the Flimflams
One of the biggest reasons why older folks are prime targets for financial con artists is because they’re likely claiming Medicare and Social Security and some may be entitled to tax refunds or owe the IRS money. Unfortunately, fraudsters know all of the above.
“Someone calls a senior claiming to be part of a government agency. They might tell the victim they have unpaid taxes and could be arrested if they don't pay them. Or they may say Social Security or Medicare benefits will be cut off unless they act right away,” according to USAA. “The scammer usually asks the victim to press a number to connect with someone who can talk with them more. Then they'll try to trick them into providing private information.”
Good news: the fix is easy. Impart upon clients that NO federal government agency makes outbound phone calls. Not even the IRS. Not even the IRS when someone owes money. And if the IRS isn’t making outbound calls to collect money, we can be sure no other agency is making those calls.
Speaking of phone calls, a common con job is someone calling an older person and saying Can you hear me?" Should the person receiving the call respond with “yes”, that’s affirmative answer is recorded and can be used to access bank accounts and the like. Point is advisors should tell senior clients and their children that should they receive such a call, the best course of action is to simply say nothing and hang up. Some other financial cons prey upon human emotions, such as familial ties and love. Those are known as the “grandparents scam.”
“This is when a scammer convinces an older adult that their grandchild is in trouble and needs money,” adds USAA. “This happened to my own mother-in-law recently when she was visiting and got a call on her cell phone. The caller told her there had been an accident and her grandson was in jail. They said she needed to wire money for his bail.”
Prevention Tips
There are a variety of easy-to-implement tips advisors can provide to senior clients and their children to bolster defenses against financial fraud. Solid starting points include identifying a small number of family members that can be trusted to be guardians of older clients’ finances – trusted enough to be included on checking and investment accounts and the like.
As noted above, a big tip is being aware of telephone scams and another idea is to avoid using cash for large purchases. And of course, lean on professionals, including advisors.
“Check with an attorney or financial professional before signing something you don't understand,” concludes USAA. “Build relationships with financial professionals who can help you watch out for suspicious activity.”