How to Avoid Senior Scams

How to Avoid Senior Scams

Drew Tignanelli

Drew Tignanelli

The greatest financial scams are perpetrated on the most vulnerable group in America, aging senior citizens who are slowly losing mental capacity. The aging process invokes emotions of fear, consequently triggering emotions of anger or greed because the mental capacity to control these emotions with logic is impaired. Emotions are the trigger switches that sales people use, and scam artists represent the magnification of the dark side of a salesperson. Scam artists are corrupt sales people who try to illegally manipulate money from you. Financial salespeople can manipulate money from you, too, but they stay within the boundaries of the law. As we or our parents’ age, we must be aware of these risks and develop a fail-safe plan to minimize the occurrence of this nightmare scenario.                
 
First step, be aware of the potential of being scammed if you are a senior citizen, or discuss this issue with aging parents. During my 35-year career, I have seen some horrifying cases in which thousands—even hundreds of thousands—of dollars were lost as a result of senior scam abuse. I can also tell many heartwarming stories in which the threat of being scammed was minimized or mitigated because of good proactive planning. 

Second step, designate someone whom you fully trust to be your financial guardian. Allow your financial guardian online oversight to oversee and monitor your accounts. Inform your professional advisors that they have permission to intercede on your behalf if they observe you making irrational decisions or if someone attempts to become your financial guardian who does not seem to have your best interest in mind. Ensure that your professional advisors know how to contact your children or other family members if they should need to step in. 

Third step, discuss with your guardian that if your mental health begins to decline, then you may speak or act in a way that may be frustrating to your guardian. Tell them to not give up on you. I remember a guardian who was continually accused of stealing money from a senior’s account; however, it was the dementia talking, not the person. It was demeaning for this guardian to be reported to financial institutions for stealing, but a candid talk with the guardian before the senior’s mental health began to fail may have helped lessen the anguish of this ordeal.   

Fourth step, all humans have a need for companionship, and the more a family can provide this companionship, the less able a conniving person will be able to scam a senior citizen for unscrupulous gain. When employing individuals to assist with home care—helpers for custodial care, cleaning services, or landscaping services—vet them carefully and monitor them regularly. Caregivers and home service providers are an enormous risk to the senior community.

Fifth step, always work with a fee-only financial advisor who is not affiliated with a brokerage/insurance company and who must be held to a fiduciary standard at all times. The sale of commission-based products is a major concern of the insurance and securities regulators to the senior community.
 
Because more people are living to be 80, 90, and even 100 years old, more people are experiencing diminished cognitive ability. We must all admit that our parents, our spouses, and our own selves may be at risk to a senior scam during our respective lifetimes. Senior scams can also be perpetrated by a son, daughter, or professional advisor undeserving of the senior’s trust. This is why a team of people, including family members and professional advisors, need to check and balance each other—advisors and family members should develop relationships with each other while you are in good health. The risk of being scammed while enduring diminished mental health is enormous; you would be wise to proactively manage this risk while your mental capacity is maximized.