This post originally appeared in Forbes as part of its "Intelligent Investing" series. For the original post, click here.
As we’ve all celebrated the technology that’s enabled us to communicate like never before—tuning into a live feed of a grandchild’s dance recital, or emailing with old friends—scammers have simultaneously rejoiced the growing number of pathways that allow them to reach you and your bank account. Today, approximately one in five Americans aged 65 or older has been impacted by some type of financial abuse or scam, according to data from Wells Fargo. The losses total a staggering $36.5 billion.
These are statistics no one wants to be a part of. Over the last 40 years of my career as a financial planner, protecting my client’s wealth has always been at the top of my list of duties. As my clients have aged along with me, the term “protecting” has taken on new significance. These days I’m not just helping to guide them through a recession or market volatility, I’m walking them through what can sometimes feel like a minefield of potential abuse.
Last year alone, more than 47 billion robocalls were placed to Americans, an increase of more than 56% over 2017. No, not all of them were fraudulent, but calls are just the tip of the iceberg. The ten most common scams (ranked from most to least common) are as follows:
- IRS impersonation
- Robocalls and unsolicited phone calls
- Sweepstakes scams
- Computer tech support scams
- Elder financial abuse family and friends
- Grandparents scams
- Romance scams
- Impersonating social security calling
- Impersonating winnings from lawsuit claims
- Identity theft
Looking at this list is enough to make your head spin, but it also inspires me to double down on doing everything I can to protect my clients in the next stage of their lives. Ever heard the phrase, “It’s not how you start, it’s how you finish”? I’ve had this mantra on repeat as it relates to how I protect my clients--some of whom I’ve known since I founded my firm in 1981—from the threat of elder abuse. Over the decades, my clients and I have learned from one another, laughed and cried with one another and become more like family than anything else. In many cases, I now advise my client’s children, who will one day inherit the wealth that their parents and I created together. So, yes, finishing strong is the name of the game at my practice. We’ve come too far on this journey together to let anything derail the beautiful destination we planned.
But of course my clients aren’t the only one at the finish line. Every day, 10,000 Baby Boomers hit retirement age, according to AARP, and there are currently around 74 million Boomers in the country. In 2017, Boomers held more than $26 trillion in investable assets, which is wonderful, but would-be scammers are just itching for a way in. To them, "older" means more vulnerable. And while that’s certainly not always the case, 10% of people aged 65 and older have some form of Alzheimer’s dementia, according to the Alzheimer’s Association, and over the next couple of decades, these people may find themselves targets for financial predators.
Lately I’ve written a lot about wealth protection in all its various forms — sheltering yourself from the next recession, whether or not to buy long term care insurance, what the different decades of retirement demand from your portfolio, and the ultimate bomb shelter for scary times. But as a financial planner, it’s just as important to protect clients from the abuse of others, and ensure their golden years go smoothly.
Thankfully, today there are innumerable legal forms of protection clients can employ such as power of attorney and irrevocable trusts. These legal documents enable someone to act on your behalf in handling your financial affairs, and ensuring they’re being used in the manner that our clients originally intended is a responsibility that squarely rests on the back of every financial advisor in the country. And while it’s true that elder abuse scams have only grown more elaborate over the years, today there are more ways to protect yourself than ever.
First, there’s the Senior Safe Act. This act allows investment firms to delay the execution of transactions if there’s suspicion of financial exploitation. Most delays granted are 15 days, but they’re hardly a panacea in an era of 24-hour turnarounds, e-signatures and overnight delivery.
Another safeguard I recommend is to name a trusted contact when you set up any financial account. The service is totally free, and this advice is applicable to everyone, whether or not you have a financial advisor. By simply providing a name and contact information of a person that you trust—not necessarily a beneficiary—who has the authority to talk to your financial advisor, that person can be consulted in the event your advisor has questions about a particular transaction, or if something were to happen to you. Just one classic word of warning here—be careful who you trust. Although many people think that they’re most likely to be scammed by a stranger, two-thirds of financial crimes against the elderly are actually committed by people the victim knows, according to a survey by Wells Fargo.
Lastly, and thankfully, your financial planner will always be in your corner, and he or she has years of experience on the front lines in the battle against financial abuse. While in most cases a financial advisor can’t be named as a trustee of a client’s estate, our role is always the same—to protect clients’ wealth. Nothing can ever replace the ability to have a conversation with someone who cares, and who has seen it all before. Any good financial planner will tell you that an annual conversation (at minimum) is required in order to stay abreast of your needs and desired changes.
As we age, our financial lives can often become more complicated, not less, as many of us assume. Spouses and siblings pass, grandchildren are born, we move homes and change states, and we gain new financial desires. Having someone to help us manage all that is more important than many people think—just 45% of Boomers surveyed in a study by Annexus considered working with an advisor important or extremely important. That number jumped to 58% for folks earning at least $100,000 per year, and to 63% for people with more than $500,000 in savings. But no matter how much you have saved, you’ll always need open communication with your advisor if you want to stay protected from scams. Your advisor is your fiduciary, and he or she knows that eventually, we’re all going to need some guidance.