Mike Conner,* age 57, a Chief Marketing Officer for a health care technology firm in Chicago, offered to help his 86-year-old father, a retired aerospace engineer, with his taxes. While visiting his father, Conner noticed he had letters on his desk from the Internal Revenue Service (IRS) related to an unfiled tax return.
As they sorted through online documents (bank accounts, brokerage accounts, and credit card statements) to find the information needed to file his father's past taxes, Conner made a startling discovery. "During the past 18 months, my father got suckered into signing up for 94 financial and investment newsletters from advisory services, totaling $56,000 in ‘subscription fees,’ which he paid for with his credit cards."
By all accounts, it’s a case of elder financial abuse. "I don’t think they broke laws," says Conner. Although not outright theft, 51 of the newsletters that could be traced came from one financial firm and its seven sister companies.
"Financial elder fraud is a sophisticated online endeavor and it can happen to anyone. Normalizing awareness is key to helping you avoid it or navigating a crisis event as a family." says Dr. Tim Habbershon, Managing Director of Family Engagement at Fidelity. "There is often defensiveness or anger when the subject is raised because of the fear and shame that can be associated with diminished capacity. Children need to have empathy and not get caught in the emotional reactivity of the situation." Helping older family members manage their money can be awkward, but it's often inevitable.
Each of us may face a different scenario—and it might not be a parent but rather an aunt or uncle whose financial safety is at stake. However, there are 10 steps you can take before a crisis develops.
1. Begin a family conversation
"It doesn't have to be all about aging issues," says Elizabeth Loewy, co-founder and Chief Operating Officer at EverSafe, an online account service that guards against fraud, identity theft, and age-related issues. "It's really about just talking. Start with your own situation. You might say, 'I want an extra set of eyes on my financial accounts. Would you mind getting alerts if something happens? I can do the same for you.' You make it a two-way street."
"One way to navigate these conversations is to use the transparency and disclosure continuum," suggests Habbershon. We often make financial conversations an all-or-nothing topic—we either discuss finances or don't. Instead, on a continuum you ask, "What are you comfortable sharing?" and "What would you rather keep private?" This type of conversation allows for comfort and growth, and with time the transparency may grow.
2. Create a family financial management plan
First, remember that money is a sensitive topic. "Trying to act as if a financial plan is just a rational thing to do will get the opposite emotional response," says Habbershon. In addition, acknowledge the realities that your parents are at a different stage in life, it's new to you and them, and that working together can be beneficial for all. Then, start slowly and don't get overwhelmed. For example, confirm who their key contact people are, such as their lawyer, accountant, or broker. You can even gather the contact information of a neighbor who may see them more regularly, just in case of an emergency. Following that, progress to discussing money management, online accounts, and more.
3. Know what key documents have been completed
Getting organized begins with knowing what has and hasn't been done. According to Habbershon, since diminishing capacity is an aging reality that starts somewhere in mid-adulthood, we can plan for late-in-life decline. One way is through a legal document such as a financial durable power of attorney (DPOA), that allows someone to manage financial affairs on behalf of another who is unable to make decisions.
Habbershon also reminds us to ask for permission or to be invited into important conversations: "Would it be alright if...?" or "How would you feel about...?" Then ask more probing questions like, "Do you have a will, and if so, is it still current?" You could also do an inventory on insurance policies. Ask whether your parents have designated beneficiaries on bank accounts, investment accounts, and insurance policies. Do they have a health care proxy or living will, and if so, where are they stored?
Tip: Here's a list of the important documents you will need: a will, a living will, separate durable POAs for health care and financial decision making, deeds, insurance policies, investment accounts, bank accounts, income statements, retirement accounts, all outstanding loan documents, and current bills.
4. Be alert to changes in financial accounts
There is no flashing red light when someone starts to lose financial capability. "The heart of the matter is we should build the late-in-life relationships that allow us to be engaged around life and financial activities," counsels Habbershon.
Case in point, Conner and his sister always thought their father was responsible for the financial management in their family when they were younger. After all, he paid the bills. "So, when he began talking with me about buying individual stocks, I didn't ask probing questions—but I should have," says Conner.
Tip: Watch for warning signs. For example, not knowing what bills have been paid, obvious spending habit fluctuations, bounced checks, and late payment charges on credit cards.
Elder-fraud tips from the Conner family:
- Hold family financial meetings on a regular basis.
- Have someone in the family create a "personal balance sheet" to keep track of income and expenses.
- Establish power of attorney on key accounts.
- Add a trusted contact to accounts.
- Watch for signs of aging, dementia, and a loss of executive processing skills.
- Set up a system to pay all bills electronically and automatically.
- Cancel unused or extra credit cards.
- Don't be afraid to say "no" or hang up on unsolicited phone offers.
- Opt out of solicitations.
- Monitor credit reports.
5. Simplify finances
Two months after Conner discovered his father's charges, his sister reduced their father's credit cards from six to two, and he had one debit card. She also reviewed his expenses, put her father on a budget, and set up automatic bill paying and direct deposit into a checking account for any income. Conner's stepsister had already taken over financial management of her mother's affairs, paying the bills and giving her mother an allowance.
6. Keep up to date on local scams
Educate your parents about the current scams. A tactical approach to start a conversation is to just ask, "Have you heard about the latest scam?"
Remind them regularly to never reply to any request by email, regular mail, or phone for personal information such as a Social Security or credit card number. Also, encourage them to avoid pitches to purchase a product or investment that they didn't request.
Habbershon suggests making identifying scams a "family sport"—having everyone watching for scams, sending email threads, and creating a family connection around it. In the case of Conner's father, the excessive newsletter subscriptions weren't an outright scam, but it was over and above what someone in their late-80s would subscribe to or need.
The website for the Federal Trade Commission has helpful information on identifying, reporting, and avoiding a variety of scams.
Tip: If you or someone you know has been a victim of exploitation, consider making a report to the Department of Justice National Elder Abuse Hotline or to the FBI Internet Complaint Center.
7. Maintain a social connection
Isolation is a trigger for financial problems. Habbershon acknowledges that connection can be hard because of distance, life-pace, or family dynamics. Often our own guilt about not being connected leads us to do nothing. "We need to be more compassionate to ourselves—this is just life—so just doing what you can is a good thing." Even something as simple as starting family email or text threads, or calling just to talk. Any engagement is better than no engagement, so even if you're not sure what to say or where to begin, simply asking caring questions and listening is a great place to start.
8. Assign money management jobs
Money management can be handled in a divide-and-conquer strategy. In Conner's family, for example, because his sister lives closest to their father, she took on the duties of monitoring his credit card accounts, bill paying, and checking credit reports regularly. His stepsister checks the couples' bank accounts and debit card use daily, and Conner handles his father's investment accounts.
An additional option is to designate a family member as a “trusted contact” for a parent or loved one. That is, a person a financial institution may contact in certain circumstances, such as concerns about activity in the elder person’s account, and when the elder person cannot be reached. Naming a trusted contact doesn’t give that person authority to act on the account holder’s behalf or engage in activity in the account; but depending on your circumstances, a trusted contact could add another layer of vigilance against scams.
9. Monitor accounts
Two technological tools for fighting fraud: Fidsafe and Eversafe.
FidSafe®, a free, secure online safe deposit box, to save digital backups of electronically scanned essential documents such as bank and investment account statements, birth certificates, insurance policies, passwords, tax records, wills, and more.
EverSafe sends suspicious activity alerts, including warnings for unusual withdrawals, missing deposits, odd charges, changes in spending patterns, and much more.
Consider choosing a couple of family member to receive alerts. With both of these services, people who are allowed access to the financial documents can be friends, a family lawyer, or biological family members. If privacy is a stumbling block, the services can be set up in a way where you don't have to reveal amounts held within the accounts. Monthly fees range from $7.49 for up to 5 financial accounts to $22.99 for unlimited accounts, and monthly credit reports. (Fidelity customers receive a discount.)
Conner set up a FidSafe box for his father. "Dad's bank, credit card, and investment account numbers, the passwords, his renter's and automobile insurance policy, and long-term care policy are stored there," he says. In addition, his sister and stepsister have access to the virtual vault.
10. Schedule family financial meetings
When it comes to preventing elder financial abuse, regular family conversations about your parents' fiscal world is crucial. "Build up to regularly scheduled meetings. That is ultimately the best way to stay engaged and on top of the situation. Keep a tight running agenda for these meetings, however. Most importantly, don't allow them to be a time to hash out family dynamics. Make those conversations separate," advises Habbershon.
Immediately after the discovery of the newsletter subscriptions, Conner, his sister, stepsister, and his father began talking weekly. They recognized the need to stay connected, and also encouraged their stepmother to be part of the conversations.