Billions of dollars are robbed from American’s every year, and the problem is only getting worse. A recent Wall Street Journal article reported that over $1 billion was traced to scam texts in the last three years. Phishing emails and texts are getting more sophisticated leading to growing losses. Most people reading this probably understand the problem and avoid clicking links in messages from unknown sources but those most at risk are our parents as they reach their 70s, 80s, and 90s.
Over the coming decades trillions of dollars will be passing from one generation to the next. Don’t let your parents’ financial security and your future inheritance end up in the hands of a criminal network. The fact is that aging parents are being tricked into sharing their personal information with “bad actors” including AI chatbots.
Strong Defense Through Better Relationships
Now more than ever, people need a close personal relationship with their financial advisors. If a Cohen client requests money, we often know in advance that they would be in touch for the funds. If an unusual request came in, we would automatically question it and not transfer funds without a rational explanation.
For example, In the past month a client reached out to request that his account be fully liquidated. Fortunately, our staff is well trained and probed to find out why. They claimed that one of their credit cards was subject to fraudulent charges and to clear up the problem, a “sheriff” needed all this person’s investment balance temporarily and promised to return the funds once the charge in question was cleared up.
Without our intervention this client was ready to forward funds to a third party and probably would never have recovered the money. What if this client’s funds were held at a financial institution that didn’t know him and released the funds without question? His financial well-being depends on these investments and losing them would make him dependent on his children or welfare had this social engineering fraud gone undetected. This client and his family were grateful that we identified the problem and stopped it before any funds were taken.
Important Family Conversations
Fraud and financial abuse among the elderly is very common. It’s important to have frank conversations with aging parents in order to avoid the kind of scenario that almost duped our client into releasing all his funds to a criminal.
Another client “loaned” thousands of dollars to his health care aide whom he trusted. This aide spent every day with the elderly gentleman who, in his 90s, depended on the aide for much of his social interaction. The “loan” payments to the aide stopped once the pattern was detected. The client didn’t want to prosecute because he was lonely and didn’t want the aide to get in trouble, and the police investigators couldn’t force him to press charges.
Elder financial exploitation is far too common and under reported. Sometimes the abuse is only revealed after someone passes and the estate is being settled. We’ve heard stories shared by clients of such instances in their families.
Building Reliable Guardrails
A Certified Financial Planner® professional will discuss estate planning with their clients and the purpose goes far beyond seamlessly passing assets to heirs at death. With proper planning, your assets can be protected from fraud as someone ages. Naming the proper parties to make financial decisions and hiring an experienced CFP® professional adds a layer of protection and offers peace of mind.
Most of our clients hold their investment assets in a revocable trust that names one or more of their adult children or a trusted friend or relative to act on their behalf if they are not able. It is advisable to name someone a generation younger as the successor trustee to lessen the risk of memory issues or susceptibility to fraud. Not everyone is willing to give up control of their finances but with the input of a 
trusted financial advisor, the conversation is more likely to be accepted.
A reasonable transition is for an aging parent to be co-trustee with a child for a period. An alternative to utilizing a trust is to have a durable power of attorney document which names a child or trusted person to handle financial affairs. Whether utilizing trusts or durable powers of attorney, measures should be taken to protect your family’s financial security.
Embracing Life’s Realities
Artificial intelligence (AI) is adding a layer of complexity to financial exploitation. Both young and old can be manipulated into releasing money but the elderly are especially vulnerable. When physically disabled by age, your car keys may need to be taken away at some point. Similarly, as you or your parents age mentally, financial access may need to be either limited or taken away to protect them. Some may need this intervention earlier than others, but it is important for families to discuss these issues and involve their trusted advisors in the process.
