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Elder Fraud: 9 Tips to Protect Clients

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The costs of elder financial fraud and abuse are more than financial.

In fact, for elderly citizens who are financially exploited, the impact is more emotional than financial, a survey from the AICPA shows. This is because elder fraud frequently involves family members.

What's more, fraud cases involving elderly clients are on the rise, with nearly half of the CPA financial planners who participated in the survey, around 47%, saying they have seen an increase in financial fraud in the last five years.


According to Ted Sarenski, president of Blue Ocean Strategic Capital of Syracuse, N.Y. and a member of the AICPA’s Personal Financial Planning conference committee, the reasons for the rise are twofold. First, fraud is more likely to be reported than before, and, second, since the baby boomer generation is retiring and members of that age group are not very well-versed in the latest technology, their wealth is an easy target for scammers.

"As people age, they get more trusting and more unguarded," Sarenski says. "If someone pretends to be your friend, you tend to trust them more easily."

The survey found that some of the ways elderly clients are being defrauded include telephone and Internet scams, an inability to decline requests by relatives and assuming responsibility to support nondisabled children of family members.


The study highlights the important role advisors can play in helping safeguard clients' assets. Here are a variety of tips from the survey and planners who work with elderly clients:

1. Establish a financial plan and review it every six months.

Advisors should make sure that the assets on hand match what is accounted for in the plan. According to Ross Gerber, co-founder, president and CEO of Gerber Kawasaki Wealth and Investment Management in Santa Monica, Calif., it's the responsibility of the advisor to disclose any financial discrepancy in elderly clients' accounts.

2. Have regular checks and balances.

The client's support members should be identified. They include professionals, designees, those who have the authority over health-care concerns and loved ones. Communication among the members is important, as it provides checks and balances, an important aspect of stopping fraud, according to the survey.

3. Communicate regularly with elderly clients.

According to Susan Tillery, co-founder and president of Paraklete Financial of Atlanta, it is important to schedule regular meetings with clients, either in person or by phone, to be aware of any changes in their situation. This helps to pay attention to their balances and talk to them if there is any significant change.

"They don't see giving money to their sons or daughters necessarily as abuse, or they are too embarrassed to say this has happened with them or their family," Tillery says. "It takes a little investigating to come up with the truth."

4. Get permission to contact other family members.

It is helpful to have the authority to contact other family members or a professional representative like an attorney to talk about anything that has caught the planner's attention, says Carolyn Rosenblatt, an elder law attorney in San Rafael, Calif. "Sudden departure from their [elder clients'] policy should be seen as a red flag," she says. Such an action might include the "sudden withdrawal of a large sum of money."

5. Assign a co-trustee.

When a manipulative family member tries to take advantage of an elderly client, it may be time to put their assets in a revocable living trust and assign a co-trustee for the account.

6. Require double signatures for certain dollar amounts.

Ensuring that all checks are passed through the co-trustee or require two signatures if they are over a certain dollar amount can help keep fraud at bay, the report suggests.

7. Involve children and spouses in meetings.

The survey found that 77% of the time spouses are involved in elder planning meetings and that 37% of the time adult children are involved. Gerber says it is important to have children involved in meetings with advisors because it gives them a clearer picture of family assets and helps them be better prepared in times of need.

8. Tell clients to use you as the "bad guy."

One tip is to invite elderly clients to point to the financial advisor as the "bad guy" who takes care of their financial situation. So if anyone comes with sales or investment deals, they can invoke a need to check with the advisor.

Also, Tillery says, remind elderly clients to notify you of any mail, emails or phone calls that try to solicit any kind of purchase. This would keep the advisor aware of what is going on and allow him or her to check the validity of a deal.

9. Make a will.

Gerber points out that it is important for clients to make a will. This helps to clear up any questions about how a client wants his or her assets distributed. "There's nothing worse than family members fighting over money," he says.

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