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Thursday, May 28, 2015

Financial Abuse of Seniors Isn't Really a Problem

I want to remind you again, especially with this title, that the titles of these posts are myths.

A recent article in Financial Planning Magazine detailed the red flags that regulators look for to catch and prevent financial abuse of seniors.  Here they are, summarized by me:

  • Taking too much risk with the senior client's money & income.
  • "Churning" the account, that is, excessive trading for the purpose of generating fees and commissions.
  • Exaggerating benefits and/or falsely minimizing risks
  • Failure to disclose fees.  I would also add, failure to justify them.
  • Offering "forbidden" inappropriately risky, expensive or complex products to older clients.  Elder law attorney Carolyn Rosenblatt mentions non-traded Real Estate Investment Trusts (REITs) and variable annuities.
  • Failure to include- or even consider -family members in recommendations
In my experience, the worst offenses I've come across with new clients are all of the above.

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