How To Spot and Stop Senior Financial Exploitation

I read a recent article in the Los Angeles Times and was reminded, even more, of why continual vigilance is needed for senior financial exploitation. This chord strikes close to me as I have an aging mother and do worry from time to time how she could be approached for senior financial abuse.

Senior financial abuse doesn't seem to make headlines on CNN, but it is very prevalent. I was surprised to see some of these statistics in a recent survey done by these organizations: the North American Securities Administrators Association (NASAA), Investor Protection Trust, and the National Adult Protective Services Association (NAPSA).

Here are some surprising statistics from their survey:

• Half of older Americans exhibit one or more of the warning signs of current financial victimization.
• Almost half of those aged 65 or over (44 percent) got at least two out of four questions wrong about basic investment knowledge.
• About one out of three older Americans (31 percent) says they are vulnerable in one or more ways to potential financial victimization.
• Only 5 percent of adult children in touch with their parents' doctors report "the healthcare providers ever mention[ing] any concerns about your parents handling of money or relayed any concern from your parent about handling money." Only 2 percent of Americans aged 65 or older say that their healthcare provider has ever asked about "how you are handling money issues or problems."
• Four out of 10 children of parents 65 or older are "very" or "somewhat" worried that their parents "have already become or will become less able to handle their personal finances over time."

Half of our seniors exhibit warning signs of financial exploitation? Sounds scary, doesn't it? I am relieved that there are some who have heeded the warning signs and are taking action. The NASAA, Investor Protection Trust, and the NAPSA, along with medical professionals and social workers, are banning together to create the Elder Investment Fraud and Financial Exploitation project, whose sole job is to stop a "rising tide of economic exploitation of the elderly." (Kristof, LA Times)

But what can the average person do right now to prevent senior financial exploitation? The California Society of CPA's recommends that the best defense is a good offense:

• Be aware – it can happen to your family
• Identify vulnerabilities
• Take action to safeguard your family
• Look for clues of abuse
• Take action if you suspect fraud

Sheryl Rowling of Advisors4Advisors further explains what that action can look like:

“Financial fraud can occur in small amounts over time. For seniors on a fixed income, even $10 here and $20 there can be devastating. The most common scams against seniors fall into three groups:

• Telemarketing scams: More than a third of telemarketing fraud victims are over 60 years old. The most common scams are free vacations packages, time shares, sweepstakes, phony charity fund raisers, and expensive 900 numbers.
• "Free" lunch investment seminars: Shady financial advisers often lure seniors to a free lunch or dinner, promising advice on “senior” issues such as living trusts or estate planning. Once there, seniors are pressured into purchasing dubious investments such as annuities or promissory notes. Although technically legal, these products are monumentally bad choices for retirees - illiquid, complicated and booby-trapped with high fees.
• Religious or social group fraud: Among con artists' favorite targets are members close knit religious or social groups. The con joins the group and then tries to sell fraudulent investment schemes to members.

One of the easiest - and most effective - ways to protect parents is to talk to them about the common financial scams. Tell them it's important they know what's happening - if for no other reason than to warn their friends.

Also, it's important that children know their parents' social circle. Are they mentioning a new name? Have they begun to talk about someone that has "a lot of good ideas" about money? Children should introduce themselves to new people entering their parents' life. Con artists are looking for easy marks, not people with family or friends looking out for them.

Theft committed by a caregiver, such as a nurse or aide, can be very difficult to uncover. There are warning signs of caregiver financial abuse. Watch for signs that a caregiver is trying to control the parents' actions or isolate them from family and friends. When hiring a professional caregiver, be sure to check their resume and references and pay for a professional credit and background check. Finally, note that more than half of all instances of caregiver fraud are committed by a family member.

Finally, children might want to get involved with managing their parents' money. Although this can be a delicate topic to suggest, keeping an eye on things can aid in noticing trouble early. Even simply looking over their phone bills or financial statements can uncover large ATM withdrawals or expensive calls to 900 numbers.”

If you suspect a parent or other aging family member or friend might be a victim in financial exploitation, there are ways to help. Contacting a financial advisor or counselor and getting them involved is a good way to provide expertise in a delicate and serious situation for your loved one.

As always, I am available and welcome your questions or comments. Feel free to email us by clicking here.

What is a Fiduciary? And why is it Important to You?

The fiduciary standard is a code of conduct for registered investment advisors who are regulated under the Investment Advisors Act of 1940.  I am a registered investment advisor so therefore I am held to the fiduciary code of conduct.  This important standard requires me to: 

• always put your interest first
• act with prudence
• never mislead you
• provide full disclosure
• avoid conflicts of interest
• and fully disclose and fairly manage (in your interest) any unavoidable conflicts. 

This is a strict code of conduct and I am proud that I am a fiduciary and held to these high standards.   However, not all financial advisors are required to follow this standard.  Hard to believe but it is true.  Advisors who work for brokerage firms and insurance companies have to follow a "suitability" standard which only requires them to show that a proposed transaction is "suitable" for their clients.  This leaves the door wide open for big problems and abuses in the industry.  And we have seen many of these abuses in the recent years.

Brokers are not required to show conflicts of interest, details of his/her fee structure (which would be pretty shocking if disclosed) or to make sure that the product being sold or offered to the client is truly best for that client.  And if a client is wronged by a broker, the burden of proof is on the client to show the damage.  As a fiduciary, the burden on proof is for me to show that I am right or wrong.

So...who would you trust to manage your portfolio, make recommendations, help you to retire etc....?    A broker or a true fiduciary who sits on the same side of the table as you! 

The House-Senate Conference Committee is grappling with this issue right now and deciding whether all financial advisors should be held to the fiduciary standard.  This is a no-brainer, in my opinion.  We all should be fiduciaries.  The brokerage and insurance industries are working hard to strike the fiduciary provision from the reform bill.

Let your voice be heard.  Contact the committee members today and let them know that a Fiduciary Standard is the best thing we can do for financial reform.

Stewart Financial Services News

We are happy to announce that Stewart Financial Services has a newsletter! This will be sent via email to all clients and anyone of interest. If you are interested in receiving our newsletter, please email our tech team here. Also, we would love to hear topics of interest that you want to hear about. Feel free to respond at the linked email in this post, or simply respond in a comment below.

We're excited to share this new communication tool with all of our friends and clients!

Sincerely,

Judy, Cheryl and Marcie

SmartyPig

Hi everyone, this is Marcie here guest blogging today. Part of my position here at Stewart Financial Services is connecting new technology and social media trends with the sector of finance and financial planning. We are always on the look out for innovative ideas to find holistic and safe finance advice, relationships, and technology that our clients can use.

Today, I wanted to talk about a really neat organization we found that utilizes social media, teaches good saving practices, and is a safe institution to use (and free!). It's called SmartyPig.

SmartyPig is a organization that allows anyone to open up a savings account for free. Straight from their FAQ page: SmartyPig is a unique savings program that was designed to help people save for specific goals. Goals may be funded with a monthly recurring contribution from your existing checking or savings account. You can also make one-time additions of money toward your goals and receive contributions from your friends and family members. 


What's great about this is that it's, wait for it... FREE. There are no monthly fees. Every account is FDIC insured for balances under $250,000. The initial deposit is only $25.00 and account holders earn 2.15% APY on balances under $50,000, which American Consumer News states, "one of the best rates available for FDIC insured savings accounts."


You can also use social media applications like Facebook and Twitter to help your family and friends fund your stated savings goal. Tired of receiving shirts from Aunt Susan that you don't like? A simple fix is sending Aunt Susan a link to your SmartyPig account and let her deposit the money into your account for your stated goal. Goals can be anything you want: a trip, a shopping spree, or a night on the town. Plus, if you use one of their retail partners, you can boost your money by up to 12%: places like Amazon.com, Macy's, or Travelocity.


As great as SmartyPig is for adults (and for me, I signed up to fund a trip to Hawaii), this is a great tool teaching children how to save. American Consumer News blogs about how to use SmartyPig as a tool to teach children how to save:


"Watching a saving account grow via compound interest can help teach a child the importance and benefits of savings and investing at an early age.


Perhaps the most important lesson that your child will learn with a SmartyPig account is the power of setting and achieving goals. They will see the direct correlation between the amount of effort that they put in and the results of their success."


For accounts for children under 18, SmartyPig says this, "Anyone may have a SmartyPig account. But customers under 18 years of age must be invited to become co-owners by parents or legal guardians who have first opened their own SmartyPig accounts."


To test out SmartyPig, I went ahead and opened an account. Here's a list of things I needed to begin:

I found setting up an account easy and intuitive. After 10 minutes, I had validated my information, set up my security questions and answers, and finished registration with a working account. The next step is setting up routing and bank information in which you want to transfer from. Remember: your first transfer only has to be $25.00 and $10.00 monthly after that. 


And, dare I say that setting up an account with my goal was actually fun?! Now instead of getting that t-shirt from Aunt Susan, all I need to do is to send my link around for my birthday and imagine sitting in Hawaii two years from now. Yeah!


If you have any questions about this post, saving accounts, or any other things, feel free to contact Stewart Financial Services at our email or give us a call at 888.891.9709. We'd be happy to help. Happy Saving!