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My parents were in their forties when I was born. By the time I was a senior in high school, my mom and dad were already considered seniors. But both of my parents were smart, thoughtful, practical people with razor-sharp wits — especially my father, who had a particularly sharp sense of humor. Watching my parents grow old while I was still so young was a surreal experience. Over time, as they entered their 60s, I could see them taking more time to think about simple decisions. Almost anything that seemed too complicated again became a bit boring for them.
Most of us will see our parents slow down as we age. Then, one day, the tables suddenly turn, and it’s up to us to watch out for them. It goes beyond the obvious physical things like making sure their sidewalks are shoveled during the winter. Whether they’ve shown signs of severe cognitive decline — or just occasional memory issues — protecting aging loved ones from physical harm isn’t our only job. It’s also up to us to watch out for predators that could threaten their well-being and financial security.
Protecting your aging parents means staying on top of all account activity and who has access to it. A fiduciary financial advisor will also keep their information safe and help protect their money.
Finding a financial advisor you can trust, who has the expertise you need, and who is committed to working in your best interest can be a daunting task. That’s why you should consider Wealthramp’s free financial advisor matching service. Every advisor in the Wealthramp network is rigorously vetted. Answer a few quick questions, review your advisor matches, and schedule a free meeting with any or all of your matched advisors. Wealthramp will never sell your data. You won’t get pushy sales calls from them.
Older people: the most common victims of scams
The National Council on Aging notes that at least 5 million cases of financial abuse of older adults are reported in the United States each year. It’s probably much worse. Researchers estimate that law enforcement only learns about one in 25 cases.
The True Link Report on Elder Financial Abuse pegs the amount of losses suffered by seniors at $36.5 billion, but the true amount is likely much higher than that, CNBC reported this year. Seniors control about 75% of the wealth in the United States, and the reality is that seniors can’t afford to lose money because they don’t have time to make up for losses from scams.
Financial abuse can hide in plain sight
Victims tend to be more affluent, but in truth, any middle-income senior can fall victim to it. So what does financial abuse look like? These are just a few smoking guns:
- someone changing their will or other legal documents
- money or property used without their knowledge or permission
- forged signatures
- someone who borrows money without paying it back
- fraudulently obtaining a power of attorney or guardianship
- fraudulent insurance or investment schemes
- sweepstakes and lottery scams requiring them to pay money to collect their winnings
- identity theft
- fake health or pharmaceutical products
- unnecessary or predatory lending practices
But it can also be much more subtle. A broker, insurance agent or other financial adviser may offer complicated investments that are supposed to offer security and low risk, but are actually intended to make the adviser money through huge initial commissions and ongoing fees.
Outsmart the predators
Adult children can’t always be there for their parents. They may have no reason to notice, but there are things you can do to keep an eye on them, even from afar. One of the most useful steps to take is to pay attention to who is watching their finances and who knows how much money they have.
For example, the friendly neighborhood banker can convince them to cash in their FDIC-insured certificates of deposit and instead buy variable annuities that have restrictions and high costs. They might tell your parents that there is no need to understand the fine print when someone from the bank is there to point out all the benefits. Your mother or father may believe that the banker is only looking out for their best interest when he or she is actually a salesman looking for commissions.
You probably can’t be there to monitor every transaction or investment your parents make, and you don’t have to. You don’t have to be a financial investigator or an expert either. Find your parents a genuine financial advisor who practices as a trustee and will sign an oath of trust.
The fiduciary role will go a long way in weeding out tricky sellers. It is important to understand the difference between the suitability standard and the fiduciary standard. The first means that a placement is suitable for your parents, but just because a placement is suitable does not mean that it is advantageous. Advisors who follow the much higher fiduciary standard, however, really care about your parents and aren’t just trying to line their pockets by selling investment products that pay them hefty commissions.
Review this advisor by reviewing their track record and overall approach to retirement and investment planning, which should be completely transparent, with all advisor fees fully disclosed in writing. Then keep an eye on everything they do. Financial advisers in the United States are supposed to be licensed or registered, and you can find them through the SEC’s Investment Advisers Public Disclosure Database and FINRA’s BrokerCheck site. Enter their name or the name of their company. Advisors should also be willing to give you their central registration depot number to facilitate searches.
Simple steps to avoid problems
Here are some ways to help your parents make smart financial decisions:
- Make choices based on the best value for money: The lowest price is not necessarily the best deal. Compare what you’re getting before choosing an advisor.
- Take a long-term view: Financial planning is a large-scale, long-term undertaking. No financial advisor will promise you that you will get rich quick.
- Be honest about your needs: Analyzing and talking about what you really want and expect as you age is a crucial part of financial planning. If leaving a significant legacy is important, a paid fiduciary advisor can help make that dream come true. Or if you want to enjoy your money in retirement, being honest about that goal will shape your plan.
- Hear from the experts: If you’re paying for expert advice, use it. While you may not agree 100% with your advisor’s recommendations, if you don’t use most of the advice, you should probably partner with someone else.
The conversation about money
Your parents watched over you growing up, and it can be a bit of a wake-up call when you realize it’s your turn to watch over them. But just being aware is the most critical first step, so maybe it’s time to speak up. However, chances are they want to discuss their estate plans, and this is a great opportunity to ask questions about how their bank accounts are organized and what they think of their investments. Another way to broach the subject is to ask if they are satisfied with their financial advisor. Whenever there’s an opportunity to talk about their overall health and well-being, it can also be a good time to gently address their finances. It’s especially important to get your mom to talk about her financial concerns because, like many women, she may have relied on your dad to make the big investment decisions. Women control more than $10 trillion (about 33%) of total US household financial assets, and that amount is expected to rise to $30 trillion over the next five years. According to TIAA-CREF, baby boomer women rely heavily on outside advisors or family and friends for financial advice.
Realize that your parents may have already been victimized without telling you about it, as they may feel embarrassed. Many seniors are unwilling to report such incidents, either to their own adult children or even to authorities. Take the initiative and find out from your parents, as they may feel uncomfortable about taking the initiative.
The right things to do
I started the conversation about money when I found out my parents wanted to talk to me about their health. Every family is different, but here are the steps everyone should consider to make your parents’ financial life easier as they get older.
- Find all accounts, including bank and brokerage accounts, insurance information, and safe deposit boxes, and request “view-only” privileges so you can monitor activity.
- Figure out who should pay monthly bills so they get paid on time, automate the process, and ask the bank if they offer email “alerts” that let you know when balances drop below a certain amount. minimum.
- Contact an attorney and respectfully discuss setting up a power of attorney or living trust.
- Consider hiring an approved, fee-paying fiduciary financial planner to analyze all of their investments, manage cash flow needs, and create a plan to maximize their savings.
My parents passed away about ten years ago, and when they came of age, I was nervous about bringing up the subject of their finances. When I found the right moment, it came from a place of love and respect, and I think they knew that. I also believe that my father was very relieved because I don’t think he would ever come to me for help for himself. But he had deep concerns for my mother, and that was my opening. Looking back, I now realize that the details of their financial lives were a burden on them, and I’m grateful that I had the courage to speak to them openly.
Pam Krueger is a recognized investor advocate, award-winning personal finance journalist, and the founder and CEO of Wealthramp, a free advisor-matching platform that connects people with carefully screened, paid-for financial advisors. She is also the creator and co-host of MoneyTrack, which aired on PBS from 2005-2019, and the Friends Talk Money podcast, currently in its 7th season.