Helping the aged avoid fraud
Retirements are growing longer than ever, which means more decades to pay for — and more decades to avoid getting scammed out of your savings.
The financial and investment industries have noticed how often their elderly clients are targeted by fraudsters, unscrupulous family members and others. Michele Kryger, who started the elder and vulnerable client care unit at AIG, recently talked about how seniors can protect themselves.
What kinds of scams were you seeing that showed a need for this kind of unit?
One of the very early cases we had involved an elderly client who requested a $72,000 withdrawal. It was unusual for the client, so his financial adviser decided to go out and meet at his home. When he talked to the client, the client indicated that he was going to come into a large sum of money, and he’d be able to replenish his account pretty soon. But first, he needed to pay this upfront sum. That’s a red flag.
And then his wife said, “Hey, we won the lottery! And by the way, why are we getting called by some foreigner?”
We tried to convince the client not to take the $72,000 out. We reached out to adult protective services, who also tried to talk him out of it. But then he submitted a request again a few days later, and it took coordination between the financial adviser, the daughter and us to make sure that he did stop the withdrawal. And he never did send that money out. So we were able to prevent a $72,000 loss.
What can people do to protect themselves?
Two types of protection are very helpful: To have a trusted contact who’s different than your power of attorney provides a check and balance.
Power of attorney means?
Power of attorney is somebody that an individual selects to manage their finances, health or different types of activities.
What we like is where you have a power of attorney that identifies two attorneys-in-fact who have to act jointly on behalf of the client. We’ve had withdrawal requests come in from one of the attorneys-in-fact that seems unusual, and we take a look at the case and say, “Hey, we can’t accept this. It needs to be signed by both.” Oftentimes, it hasn’t come back, which means we may have prevented some loss for our client.
And trusted contact?
The trusted contact is a relatively new concept. There was a rule passed in 2018, and it tells financial advisers and broker-dealers you need to make best attempts to obtain a trusted contact from a client. And that trusted client contact becomes an added resource if we have concerns that an individual is suffering from cognitive health issues or may be subject to financial exploitation.