Avoiding Elder Financial Abuse

Elder financial abuse is a growing problem that has been observed globally. It is a crime that can be committed by anyone, including family members, caregivers, and strangers. It involves the illegal or improper use of an elder’s funds, property, or assets. According to the National Council on Aging, over 5 million older Americans are victims of elder abuse each year, with financial exploitation being one of the most common forms of abuse. In this article, we will discuss the ten most prevalent causes of elder financial abuse.

  1. Scams: Criminals and scammers target the elderly through telephone, mail, and email scams. They use tactics such as offering fake prizes, investment opportunities, or charities to steal money from unsuspecting elders.
  2. Caregiver exploitation: Caregivers can take advantage of their position of trust to exploit an elder’s finances. They may steal money or property, coerce the elder into providing financial support, or forge checks.
  3. Family members: Family members can also be perpetrators of elder financial abuse. They may take advantage of their close relationship with the elder to access their finances, take out loans, or coerce them into changing their will.
  4. Power of attorney abuse: A power of attorney is a legal document that gives someone the authority to act on behalf of an elder. However, some people abuse this power by using the elder’s funds for their own benefit or fraudulently transferring assets.
  5. Internet fraud: The internet has made it easier for scammers to target the elderly. They may use phishing emails or fake websites to obtain personal and financial information, which is then used to commit fraud or identity theft.
  6. Investment schemes: Some investment schemes specifically target the elderly, promising high returns on investments. These schemes are often fraudulent, and elders can lose significant amounts of money.
  7. Reverse mortgage scams: A reverse mortgage is a type of loan that allows seniors to access the equity in their home. However, scammers may offer fake reverse mortgages or pressure elders into taking out a reverse mortgage, which can result in significant financial losses.
  8. Door-to-door scams: Some criminals go door-to-door, offering services such as home repairs or yard work. They may overcharge for these services or fail to complete the work altogether.
  9. Financial advisors: Some financial advisors may take advantage of their clients, particularly those who are elderly and vulnerable. They may recommend unsuitable investments or charge excessive fees, resulting in financial losses for the elder.
  10. Identity theft: Identity theft occurs when someone steals personal information, such as a social security number or credit card number, and uses it for fraudulent purposes. Elders are particularly vulnerable to identity theft, as they may be less likely to monitor their credit reports or notice fraudulent activity.

In conclusion, elder financial abuse is a growing problem that affects millions of individuals each year. It is important to be aware of the warning signs of financial abuse and to take steps to prevent it from occurring. If you or someone you know is a victim of elder financial abuse, it is important to report it to the authorities and seek legal assistance. By working together, we can help to prevent elder financial abuse and protect our seniors.

Don’t buy an Annuity until you understand your “Why?”

I too often meet with new clients who want their past financial decisions checked to make sure they are in alignment with their current and future financial goals. My favorite question to ask is “Why did you purchase this?”. Most of the time there is NO clear answer or reason. I usually hear responses like “It felt like the right thing to do” or “Interest rates are so low that my banker suggested it as good alternative to my low rate CD”. Most of the time NO one can explain how it fits into their overall financial plan. Annuities are great financial tools if used at the right time and place.

I fear that many Financial Advisers are more interested in their own financial well-being than they are the clients. As an Adviser, if you serve the client in a “Fiduciary” role the potential conflict of interest can and should be avoided for the benefit of the client. There will be a time in the future when a client’s financial plan has to be put into place. With proper planning client’s goals can be achieved in the most effective manner based on their unique circumstances.

Annuities come in various forms and designs. You may want to simply grow your funds with a guaranteed interest rate by using a “Fixed Annuity”. This type of annuity is offered by various companies with varying guaranteed interest rate periods. Indexed Annuities are available and credit interest tied to various market indexes while at the same time guaranteeing principal. Variable Annuities have their performance tied to sub-accounts (separately managed investment accounts) and can vary in performance as well as value (no guaranteed downside value typically). All annuities have cost involved and typically don’t have front end loads. Most will have varying surrender fees in the early years of the contract life.

Using an Indexed or Variable Annuity in a financial plan can make sense if you utilize the “Guaranteed Minimum Income Benefit” or “Income Benefit” feature that provides a guaranteed monthly income based on a fixed growth rate. You pay for this feature via expense charges by the insurance company on an annual basis. This feature may work if you are attempting to pool all of your assets to create a monthly income plan that is reasonable for the future. The annuity product allows you to nail down a guaranteed monthly income in combination with the potential growth of the value of your assets that are invested in the stock and/or bond markets.

In summary, annuities are great tools if used in the correct manner. Don’t simply purchase an annuity until you can answer the questions, “Why?”

Disinherit your family.

Disinheriting your family can be easy if you don’t pay attention to how your assets will be handled upon your death. We all get busy with life and don’t keep our beneficiary designations up to date. Life happens – birth of a child, divorce, death of a spouse, remarriage, etc. We can help. Go to www.financialguideposts.org and view a short video on this topic. We can assist you in avoiding disinheriting your family.

“The Misunderstood Asset”

Life Insurance




With 40+ years advising clients regarding their financial plans, I am continually amazed at how little knowledge people have regarding the use of life insurance as a part of their financial plans.

Life insurance, like any other form of protective coverage is intended to protect against loss.  Life insurance is money, pure and simple.  You are shifting the risk of loss off of yourself onto an insurance company to deliver money when a loss occurs.  Pure and simple.  I have never had a widow or widower tell me their spouse was over insured or “insurance poor”.

Over the years the media has distorted the real meaning of life insurance.  Several talking heads that come to mind make a very good living distorting the true use of life insurance as a financial tool.  The media gets caught up in life insurance – vs – ?.  You name the product.  Many media outlets can’t profit from the subject unless they bring controversy to the table.  “Controversy” sells, period.

Life insurance is money that is delivered at the time of loss to the named beneficiary.  It replaces income, secures a child’s education, pays off a mortgage, secures the line of credit for a business, etc.  When money is needed, life insurance can be one of the most cost effective ways of providing capital at the least cost to a family or business.

Life Insurance is not for the insured, it is for the beneficiary.  If you understand the “why”, then you can address the “reason”.  We have been brainwashed by the media to get bogged down with all of the “controversy crap” that is regurgitated out of the TV, Radio, Newsprint, etc. without any explanation as to “why”.  In my opinion we have failed to think for ourselves and choose to act on information from a poorly vetted source.  I have witnessed too many situations where in the end there was not enough money for the family or business to continue on.

Ok, you maybe sense my frustration with the problem.  In this and the following blog posts I will be bringing the truth to you so that you can make your own decision as to the following:

  1. Do I need life insurance?
  2. If so, what type?
  3. What amount?
  4. Which company should I choose to provide the coverage?

But first, here are a few basics that you may or may not be aware of:

  1. A life insurance death benefit, if properly structured, should be paid to the beneficiary totally “income tax free” . As I like to say, “It is not what you have, it is what you keep that is the most important”.
  2. If you use a permanent form of life insurance that generates a cash value, your funds grow “tax deferred”, not “tax free” (more on this when I address using permanent, cash value, forms of life insurance).
  3. You can access your cash value, without a taxable consequence, via policy loans.
  4. The owner of the policy controls the policy.
  5. The biggest mistake I see on older life insurance policies is the failure to keep the beneficiaries up to date. It is not what you meant to do, it is what you have done that takes precedent at time of claim.  I have seen a few former spouses benefit at the expense of the current spouse (this is NOT funny!).

In my next series of blogs I will go into each type of life insurance plan you can purchase with full details as to the advantages and disadvantages given the specific circumstance.