Financial scams and abuse, especially against older Americans, more than doubled over the last five years, according to reports from financial services firms.
Part of the reason for the increase is that financial firms are more alert for signs of fraud and abuse. They also have more actions they’re allowed to take when they see problems. Another reason is that the Baby Boomers are getting older, so there are more targets than in the past.
NFL Hall of Fame quarterback Fran Tarkenton recommends every person age 65 or older implement a plan he developed and put into a book he co-authored, Safe and Secure (Regnery 2019). The plan is consistent with my past recommendations.
The 79-year-old Tarkenton says he’s concerned about fraud and abuse because it’s growing rapidly and is hurting people in his age group.
The first and most important step is to avoid isolation. Tarkenton recommends that everyone develop a team of at least four trusted people. He recommends for most people the team include a family member, accountant, attorney and financial adviser. Each member of the team should know what’s going on with your finances and be consulted before major actions. Also, you need to be in charge as much as you can rather than letting one group member lead the agenda and control information.
At some point, you probably won’t be able to remain in charge and make good decisions. By that time, you should have selected someone to act as your agent under a power of attorney, what Tarkenton calls a financial caregiver. It’s especially important to have established the team or circle of advisers before this point. You’ll want several people providing checks and balances. And with four people, it’s hard for them to conspire to take advantage of you.
Another recommendation is to simplify your finances as much as possible. Consolidate your investments at one or two brokers or mutual funds. If you own complicated or unconventional assets, at some point you should liquidate them, pass them on to the next generation, or hire trusted people to manage them.
Another way to simplify is to put a portion of your nest egg in annuities, such as immediate annuities providing guaranteed income for life. The insurer does the investing. And it’s harder to steal money that’s being held by an insurer that pays you a fixed amount monthly.
Organizing your documents and records also is key. As you age, good organization makes it easier to stay on top of things and helps your advisers stay fully informed. Good organization also ensures things won’t be lost or mishandled during the transition to the next generation of owners and managers of the assets.
Tarkenton says to be transparent. Don’t be secretive about your financial affairs with your team. It is tough for people to help you and protect you when they don’t have a clear picture of your financial affairs. Simplification and transparency apply to your team of advisors as well. You should be able to understand what they’re doing or recommending, and they should be transparent about what they’re doing on your behalf.
Of course, Tarkenton urges people to protect their personal identity information. We’ve discussed this fact many times in the past. The key step is not to be isolated. You should have a range of social activities and friends, of course.
But it’s also good to seek advice from several people regarding your finances and be sure each of them knows what’s going on. These checks and balances and different sources of information maximize your protection.