Pride. It comes before a fall—sometimes literally, if you’re talking about aging parents who may not want to admit their declining ability to manage money, avoid financial scams, and protect themselves from identify theft. As the adult child of older parents or in-laws, it’s important to have conversations about the scams that might endanger them, as well as their future financial plans. All this can be delicate to approach, but there are ways and it shouldn’t be put off.
“The fact is, a lot of people experiencing cognitive decline refuse to believe that,” said Matt Mahoney, of Senior Investor Oversight at TD Ameritrade. “Fraud brings up the pride factor. The last thing to go is your pride. They’re proud of their accomplishments and refuse to believe they’re vulnerable.”
Your parents might be healthy now, but—like it or not—aging often exposes people to financial fraud and reduced capacity to responsibly manage their finances. Have you or they considered what might happen if mom or dad takes a bad fall and hits their head? It’s not pleasant to contemplate, but it’s not something you can necessarily ignore. If this happened, who would pay their bills? Do they have an estate plan? Is there a power of attorney in place? Are fraud protection, credit monitoring, and identity theft protection in place to protect against financial scams?
Even if your parents don’t get hurt or sick, the aging process can sometimes put them in greater danger of falling victim to financial fraud. That’s why it’s so important to have a financial fraud protection plan for them, put credit monitoring and identity theft protection into place, and know where their important financial documents can be found. You might also want to consider making sure they have a credit card protector—something that protects their cards from identity theft.
The elderly are often victims of the $1 billion financial scam industry. That’s because mature investors tend to have large cash flows, feel embarrassment about being less capable to manage their own affairs, and have varying degrees of cognitive function.
Financial abuse costs older Americans more than $2.6 billion annually, according to a MetLife study. Another study conducted by the New York State Office of Children and Family Services found that one in 13 older adults in the state had been victims of elder abuse in the previous year, with major financial exploitation reported at a rate of 41 per 1,000 surveyed.
Having the Fraud Talk
Because of the pride factor, it might be hard to face talking to your parents or in-laws about the danger they might face from frauds. But it’s worth it to have the conversation long before they become most vulnerable.
“It’s an important conversation to broach,” said Kathy Stokes, a Senior Advisor for AARP. The important thing is to make sure your parents know you have their best interests in mind, and follow some of the tips below for raising the topic and discussing it. Stokes recommends the following tactics to protect your parents from fraud:
- Let your parents know that most scams come over the phone, although texting is increasingly popular.
- Scam calls can sound very legitimate and even scary for the uninitiated. You might consider reminding your parents not to pick up the phone unless the number is familiar.
- You can help your elderly parents develop a “refusal script” so they know what to say if they do get stuck on a call with a pushy scam artist. Even having a sentence or two written down, such as “No thanks, I’m hanging up,” can help in the heat of the moment.
- You or your parents might want to consider staying on top of the latest financial scams by signing up for AARP’s Fraud Watch Network email alerts. This is a good way to keep them on fraud alert.
- Help educate your parents (and yourself) about common warning signs of a financial scam.
- Remind your parents that a lot of elderly financial abuse comes from people who know the victims. A caregiver or relative might be scamming from them and they might not realize it’s happening. As an adult child, keep a close watch on the people providing care to your elderly parents and other relatives.
The old saying about an ounce of prevention applies, but even adult children who’ve had “the talk” with their parents should keep an eye out in case trouble develops.
“If you’re paying enough attention, you can see signs that something may be going on,” Stokes said. “Whether or not your parents let you monitor their banking activity, you can keep an eye on it. Once they figure out they’ve been hoodwinked, they’re often embarrassed.” If your parents grow silent when asked about their financial situation, it might be time to worry. Make sure they know to report fraud and not be shy.
Hopefully it never comes to that point. You can help protect your parents by taking the measures above, as well as by taking advantage of processes like adding a Trusted Contact to your TD Ameritrade brokerage account, which allows clients to provide a “trusted contact” whom the firm can contact for several reasons, including but not limited to possible fraud or if an account holder appears to be incapacitated.
The trusted contacts rule—which was proposed by the Financial Industry Regulatory Authority (FINRA) and approved by the Securities and Exchange Commission (SEC) and became effective early this year—is designed to provide a greater degree of investor protection. The trusted contact can be a family member, such as an adult son or daughter, whose contact information will appear on an investor’s account.
Beyond protecting your parents from fraud, be sure to discuss their finances with them and know where they keep their important financial documents. Discuss whether long-term care planning might make sense, be sure they have an estate plan, and bring up the powers of attorney process.
Add a Trusted Contact
If you are a current TD Ameritrade client and you would like to take this opportunity to add trusted contact information to your account, call us at 800-669-3900.