How Financial Advisors Can Help Protect Elderly Clients From Fraud
Financial abuse, frauds, and scams are common in today’s day, and age, and the elderly are the most common victims of these frauds. According to the National Council on Aging, at least one in 10 community-dwelling older adults has witnessed some kind of abuse. The elderly population in the United States is on the rise. In 2018, there were approximately 52.4 million people aged 65 and above in the country. The U.S. is expected to have an astounding 80 million older people aged 65 and above by 2040. This will comprise an estimated 21% of the entire country’s population. Further, by 2060, the population of people aged 85 and older is likely to triple. Some studies also show that by 2034, the number of older adults will outnumber children.
Considering the fact that the country’s population is likely to have more older people in the near future, it becomes vital to ensure the financial interests of the community are safeguarded at all costs. Elder financial planning can help eliminate some common issues faced by older people. If you wish to learn more about financial planning for elders, consider consulting with a professional financial advisor who can guide you on the same.
Read below to understand how the elderly are vulnerable to being scammed financially, and how hiring a financial advisor could help protect them from fraud.
How are elders financially abused or scammed?
1. Through phone scams
Scams are the most common way of financial abuse amongst the elderly. Due to the lack of technological know-how in the older generation, many scammers use new-age methods, such as obtaining passwords, account numbers, Social Security numbers, etc., to carry out robberies, thefts, and other unauthorized transactions. Many times, someone claiming to be from a well-known tech company may tell the individual that there is a problem with their computer or device and offer to fix it for a fee, take out crucial information in the process, and use it against the older adult.
Older adults may also experience abuse from their caregivers in the form of mismanagement or unauthorized use of their property and resources, mishandling their income, etc. In some cases, an outsider may pretend to be a government official, bank employee, or someone else in a position of authority and use high-pressure tactics to convince the older adult to share personal information or send money. Some fraudsters may also introduce the elderly to fake high-return investments that do not exist. This is a common way to target an individual’s retirement savings. Emails about lotteries where the winner has first to pay a fee or provide their personal and bank information are also popular. Fraudsters may also pretend to represent a charity and use emotional appeals to convince the older person to donate.
2. Through fake relationships
Older people living alone can be targets of scammers. Scammers may approach them through a romantic or platonic relationship and ask them for money. They may use this money for their personal needs, on children or other dependent members, or to carry out more fraudulent and illegal activities. People living alone are often vulnerable and can easily become victims.
How can a financial advisor for the elderly help eliminate or reduce financial abuse?
Financial advisors can play a crucial role in helping the elderly protect themselves from financial abuse. Here are some ways in which financial advisors can help:
1. Educate the elderly on ways to protect and defend themselves
Educating the elderly on the warning signs of financial abuse is the first step in eradicating such disputes. Financial advisors can help the elderly recognize the warning signs of financial abuse, such as unexpected changes in their bank account, missing personal items, etc. Older adults may have health concerns or age-related issues that can affect their alertness. As a result, they may not always be able to spot abuse and report it. However, financial advisors have years of experience and financial acumen to back their judgment. They can easily keep track of transactions, identify any changes or miscalculations, and help their clients take timely actions to spot any kind of misuse.
Financial advisors can also help the elderly understand the best practices in terms of sharing personal or financial information, maintaining privacy, and keeping their financial and legal documents safe. They can help them understand the various types of fraud in the market and how people can take advantage of them. This can help increase awareness and empower the elderly to be cautious and mindful of how and when they use their resources and to whom they provide access to.
Further, financial advisors can educate their clients on elder investments that may be appropriate for investors in their age group. Annuity plans, pension plans, etc., can help them save for their future needs and emergencies. This can empower them financially and ensure their security in diverse situations.
2. Encourage the elderly to designate a trusted individual to act as their agent
Older adults may require someone to carry out some tasks on their behalf in the event that they become incapacitated. The elderly may also need to appoint a trusted person with their power of attorney. As a person grows old, they may lack the energy, health, and interest to manage their money and other assets. There have been many cases where older adults have appointed people other than their close friends and family. It is essential not to trust others with matters of finance. A financial advisor for the elderly can help them pick trusted individuals, such as a family member or a close friend, to give them authority to make financial decisions on their behalf. This can ensure that the client’s hard-earned money and other assets are well-protected and not misused. It can also ensure that their future beneficiaries are not stuck in legal hassles and disputes.
3. Set up a system for monitoring financial accounts
In the present day and age, technology can be a boon and a bane. While scammers may try to use it to infiltrate other people’s accounts and misuse their money, automation and alerts can help clients protect their money. Financial advisors can help the elderly set up alerts on their bank and credit card accounts to detect unusual activity. This makes it easy to monitor their transactions and alert the bank or credit card company if there is any theft or mishandling on the card or account. Additionally, it also helps clients manage their money better. Retirement savings are a limited pool of money, and keeping track of expenditure can ensure optimal utilization and establish sensible spending habits. Financial advisors can also review monthly statements with the older adult to ensure that all transactions are legitimate.
Automation can greatly help here. Most banks, brokers, and credit card companies offer automated services that make tracking money a lot easier. A financial advisor for the elderly can encourage their clients to shift to automation for bill payments, savings, investments, etc. Additionally, financial advisors can recommend cyber security solutions to their clients to ensure better protection and security from thefts.
4. Help the elderly with estate planning
Estate planning is an integral component of financial advice for seniors. Other than outsiders, older adults may also be victims of family politics. Children, grandchildren, spouses, ex-spouses, etc., can take advantage of a situation and misuse the client’s estate. However, proper estate planning can help in these situations. Financial advisors can assist the elderly with setting up wills, trusts, and other estate planning documents to ensure that their assets are protected and distributed according to their wishes. This provides complete protection of the client’s estate while offering them peace of mind. Estate planning is an important goal, even in instances of no abuse. It can help reduce taxes, remove the need for probate, and eliminate family feuds.
5. Stay up to date on the latest financial scams and warn clients
As mentioned above, there are various ways in which a person can be scammed. Right from lottery scams to charity and fake investment schemes, there are a number of things a person must be wary of at all times. Financial advisors can stay informed on the latest financial scams and share that information with the elderly. They can educate the elderly about the use of the internet and other forms of technology to protect their information. They can also help the elderly avoid common scams, such as phone and email scams. The financial advisor can leverage their experience and industry know-how to spot popular scamming methods and pass on the information to their clients.
6. Keep an eye on clients’ caregivers
Caregivers may exploit the elderly as they are the primary line of contact. They may have access to the individual’s home, finances, health records, contact information, and more. They may also know their client’s strengths and weaknesses. Financial advisors can add a layer of security by keeping an eye on the caregiver. Tasks like paying bills, filing tax forms, withdrawing or depositing money from the bank, etc., are some areas where the financial advisor may intervene or track. In the case of any discrepancies, they can alert the client as well as the concerned authorities and catch the culprit.
7. Foster a relationship built on trust with their client
A financial advisor for the elderly can build a relationship of trust with their elderly clients, making it easier for them to discuss financial matters openly and honestly. This trust can also help the elderly feel comfortable disclosing potential abuse. In many cases, the elderly may shy away from talking about the abuse due to a lack of companionship or trust. The fear of being ridiculed or judged can also prevent someone from sharing their experience. However, a solid professional association can help people overcome these fears. This can help catch fraudsters and save other people around them from similar scams. Continued honest and open communication can particularly help financial advisors establish trust with their clients.
Financial advisors can play a crucial role in helping the elderly protect themselves from financial abuse. They can help educate their elderly clients on the warning signs of financial abuse, set up systems for monitoring financial accounts, and stay up to date on the latest scams. However, it is also vital for older adults to empower themselves with the right knowledge and tools to defend themselves, to always be cautious and never trust strangers with their personal and financial information. It is also important to alert those around or the police in the case of any physical, mental, and financial abuse or misdemeanor. Not only does this help catch the abuser, but it also warns other people to be careful.
WiserAdvisor’s free advisor match service can help elderly clients find a suitable and trustworthy financial advisor to protect themselves from financial abuse and live a financially comfortable life with peace of mind. All you have to do is answer a few simple questions based on your financial needs, and the match tool will help connect you with 1-3 advisors that are best suited to meet your financial requirements.