For Jeff Wyble, a vice president with Fidelity's Advanced Planning group, talking with clients about a strategy to pay for a new house is a pretty normal experience. But during the pandemic, he spoke to a couple about a seemingly routine purchase like this, and it set off warning bells.
The couple, a husband and wife in their 80s, were in declining health. Uprooting themselves from their long-time home seemed out of character, so Wyble began to probe more deeply, looking to better understand how they arrived at their decision. It turned out to be a case of potential elder fraud manipulated by a caregiver who helped prepare their meals.
The couple was at particular risk because they had no children or other family in their inner circle and had become increasingly isolated over the course of the COVID-19 pandemic. They needed a trusted person on their team looking out for unusual spending.
Elder financial abuse comes in many different varieties, and affects people of all income groups. Some estimates suggest 5 million older Americans are abused each year, according to the National Council on Aging. Surprisingly, the majority of perpetrators against these suspectable individuals are family members, friends, and neighbors.
Protecting yourself against abuse and exploitation takes education, monitoring, and a careful plan for trusting the right people. Here are some things you need to consider:
Know the common dangers
Some forms of abuse are very common, so they can be hard to detect. More than a third of the cases that Debbie Noury, director of Fidelity's elder financial exploitation investigations group, sees are scam-related. These include telephone scams purporting to be from the Social Security Administration or IRS; sweetheart scams, where lonely elderly are tricked into giving money to a scammer pretending to be a potential romantic partner; and home repair scams.
Wyble has seen this in his own orbit when a family friend almost fell prey to one of the most common, the grandparent scam, where a senior receives a phone call or social media message from an individual posing as their grandchild who is in need of money and does not want to ask their parents for assistance.
"She had $6,000 in hand to wire, but a relative happened to be there and noticed what was going on and was able to stop her," Wyble says.
On this front, communication and education are the chief defenses. Make sure you and your family members know the potential dangers and that you are aware of what is going on with elderly family members or loved ones in your care—including who is coming into the house and what level of spending is beyond normal limits.
For those caring for themselves who want to set up protections before anything bad happens, you can monitor your financial accounts by setting up alerts offered by financial institutions or a service like Eversafe, and sign up for the National Do Not Call Registry to try to reduce scam calls. The IRS and AARP also maintain robust scam-alert resources.
Even if you don't have immediate family to look out for you, you can still designate a trusted contact person to help manage your affairs and look out for you. You can name that person to your financial accounts, and they will be alerted if your financial institution notices anything amiss in your transactions. They would not have to have any authority on the account and would not be able to transact; they would just be a safeguard, overseeing account activity. The person you name does not have to be a family member, either. It could be a friend, a financial professional, or an attorney.
"We encourage trusted contacts so wholeheartedly," says Noury.
Know yourself
To protect your wealth from scams and fraud, it's critical to have a plan in place before anything bad happens. Doing that, however, means being honest with yourself. Are you the kind of person who always gives whatever your children ask for, even if it starts to dig into your nest egg in a way that impacts your retirement plans?
If you can't be sure you can say no to yourself or others when it comes to money, you may want to put some protections in place to wall yourself off from making bad decisions with your money.
Wyble had a client who asked how he could make it more difficult for himself to give money to his son, who had a gambling problem. No matter how the client tried to provide money to his grandchildren—putting it a 529 college savings plan or giving it to his daughter-in-law directly—it ended up lost. The client ended up using trust structures to protect the assets.
"Best case scenario is when you are aware of your own susceptibility," says Wyble. One option to consider to keep your assets safe is to consolidate your accounts in one place, which will make it easier for you to keep track of everything as you age. This also makes use of the ability of your financial advisor to keep an eye on your accounts and recognize whether anything is amiss.
Know your family
Beyond having a trusted contact, you will want to have a properly executed power of attorney so that somebody (or several different people) can handle your affairs in case you become incapacitated. Every adult needs this, but it becomes even more important as you age.
Depending on the dynamic of your family, this can get complicated. Noury says she spends a lot of time helping clients figure out how and when to undo powers of attorney when the situation no longer is tenable.
"Just because you give a child power of attorney, it doesn't give them license to steal. And just because they are going to inherit the money someday, it doesn't mean they can take it now," says Noury. "If you really feel like there is someone with power of attorney who is acting inappropriately, then get a different one. Don't give them that open door, because once the money is gone, it's gone."
When you are trying to figure out how to manage this process, family mapping can be a useful exercise in the financial planning process. This is an interactive experience that allows you to see a visual snapshot of money and relationships that can help drive family harmony.
Make sure to share these insights with your financial professionals, so that they can be on guard for red flags—unusual requests for withdrawals, pressured purchases, risky investments out of line with your long-term plan, or changes to beneficiaries who are in the family map (such as adding a household helper to a life insurance policy).
"It's important to let your financial professional get to know you, so they can keep eye out for indicators of potential financial elder abuse," says Wyble.
Bottom line
As you age, make sure you have a plan in place that addresses your needs in case you can't handle your own affairs. You may want to consult with a financial professional or attorney to help you figure out the options that will suit your needs.