• Bernhardt Wealth Management

Protecting Older Americans

According to recent reports, financial elder abuse is on the rise, costing elderly Americans an estimated $36.5 billion in 2020 alone, according to the National Council on Aging. By one estimate, roughly one in three older Americans has been scammed in the past five years—what an official at the Institute on Aging calls “an elder financial abuse epidemic.” Sadly, only one in 44 elder abuse cases are ever reported. Perhaps this is why the victimizers regard stealing from older Americans as a low-risk crime. The problem has become so severe that on June 14, 2021, President Biden, in concert with the United Nations, proclaimed “World Elder Abuse Awareness Day.”

There is now a whole dark infrastructure of schemes to fool people in the early stages of dementia into parting with their money, including investment scams aimed at people with marginal retirement assets who want to boost their income and pop-up messages on websites that trick the victim into downloading a virus that sends personal information to the scammers. Seniors are often targeted by fraudulent telemarketing calls, including solicitations for nonexistent charities or a frantic phone call saying that a beloved relative is stranded and needs money wired to them.


The newspapers offer lurid stories of how scammers convince seniors that they’ve won a big sweepstakes contest; all they have to do is pay duties and taxes in order to get the payout. $25,000 later, the scammers have stopped answering the emails, and of course the sweepstakes payout never arrives. In other cases, a scammer may obtain of seniors’ personal information, forge their names, and open fraudulent bank accounts, siphoning retirement dollars until there is nothing left.


In a financial context, a broker might suddenly appear in the picture and start high-commission trading in unsuitable investments or talk the victim into taking out a loan on their home in order to increase the amount of commissions that could be generated. (This, of course, is called churning, and it is not always clear when trading crosses the line to become an illegal activity—especially if the broker has gotten the customer to sign a document he or she may not understand.)


Many times, the abuse is an inside job; a caretaker or new ‘friend’ will appear on the scene and convince a retiree to give them power of attorney control over the finances, change their will in the scammer’s favor, or “help them out” with increasing payment amounts. In a recent case, the grandchildren of a wealthy widow joined a brokerage firm, took control of their grandmother’s investment account, and set about churning it to turn her money into their commissions. The grandmother had to go to court to get back control of her own (diminished) finances.


The red flags are easy to state but not always easy to spot: unusually frequent or unexplained withdrawals from a retiree’s bank account; ATM withdrawals by an older person who has never used an ATM card; new “best friends” accompanying an older person to the bank; suspicious signatures or outright forgery on checks; bank statements that no longer go to the customer’s home; a caretaker, relative, or friend who suddenly begins conducting financial transactions on behalf of an older person without proper documentation; and altered wills and trusts.


The American Bankers Association offers some basic tips that might help retirees protect themselves:

  • never pay a fee or taxes to collect sweepstakes or lottery “winnings”;

  • never rush into a financial decision; instead, ask for details in writing and get a second opinion;

  • pay bills with checks and credit cards instead of cash, to keep a paper trail;

  • if something doesn’t feel right, back off—feel free to say no; after all, it’s your money.

If relatives or friends notice any of the warning signs, they should immediately investigate. If they need assistance they can contact Adult Protective Services in their town or state. And they should report all instances of elder financial abuse to the local police.


The bottom line here is that there are many people who can’t be trusted with an older person’s finances. Perhaps the best protection is to find a son or daughter who unequivocally has the retiree’s best interests at heart. In the professional world, attorneys and financial planners or investment advisors registered with the Securities and Exchange Commission are required to adhere to a fiduciary standard, which means putting the interests of the person they’re advising ahead of their own interests at all times.


Bernhardt Wealth Management is a fiduciary financial advisor, required by professional and ethical standards to place the client’s best interest first in all cases. To learn more about how important it is to work with a financial advisor who is a professional with your best interests at heart, please click here to read our article, “Working with the Right Advisor.”


Buen Camino!

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