Seniors lose more than $36 billion annually to fraud and exploitation. How do I keep my elderly parents from getting ripped off by unscrupulous con artists? When should I step in and take over my parents’ finances, and how can a financial adviser help?
[michael barbieri, partner and security consultant, pdi investigations inc.]
You hear a lot about real estate or investment scams, but most cases of fraud against the elderly are perpetrated by the people they depend upon the most—their in-home caregivers. We investigate hundreds of cases a year. One day, Mom’s checking account is full; next thing you know, it’s empty. We’ve had many cases where the caregiver writes checks to ‘cash,’ supposedly for a household expense, and gets the elderly client to sign the check. Or a caregiver has access to the client’s credit card to buy groceries and medicine, but they also buy things for themselves—sometimes a little, sometimes a lot, depending on the client’s level of mental awareness. Over time, it can add up to an incredible amount of money.
I’ve known sophisticated business executives who’ve been completely duped. They’re so relieved to find someone to care for their parents, they let their guard down. You should conduct your private life just like your business life. Practice due diligence before you hire. Don’t employ anyone for your parents without a thorough background check.
Our firm, for example, provides an authorization and consent form for applicants to fill out, and we’ll conduct a complete background investigation. In nearly every case of a caregiver who steals from a senior, an investigation will reveal huge bankruptcies, liens and judgments, and often a criminal record. Chances are, you’re not the first person they’ve ripped off. And they’ll keep doing it until somebody puts them in jail.
[julie gampp, vice president/investments, stifel]
Every family is unique. Some seniors are open about financial affairs, and others are very private, even with their children. Approaching the subject can be difficult, so including an experienced financial adviser to unearth sensitive topics can help. He or she can ask questions the adult child is uncomfortable asking.
In my practice, based on the individual situation, I help identify and assemble the correct team to meet family goals. That team may include an estate attorney, a trust department, or simply getting the siblings together at one table. Many older adults have their assets spread among numerous banks and financial institutions. That can become hard to manage, and makes fraud on their accounts more difficult to detect. A financial adviser is a great resource for determining how best to simplify the situation, and this service is often free of charge for clients.
Many times, consolidating assets into a few accounts is all the senior needs to continue managing the assets themselves. It also simplifies things if an adult child ever needs to take over day-to-day management. Should that time come, a power of attorney is commonly used to authorize the adult child to act on the parent’s behalf, but it isn’t always necessary. If the client has already drafted estate planning documents (for example, a will or trust), I recommend they provide a copy to the financial adviser to be used in these discussions.
