Financially Speaking Podcast

When Financial Plan Go Awry

Published on June 26, 2015

A recent article in Financial Planning (June, 2015) pointed out that some advisors spend decades working with their client’s plan for retirement, only to see that plan fall apart.   It seems that the most often mentioned reasons were divorce, second homes, starting a new business, over spending and unexpected healthcare costs.  I can understand those reasons, but two others are reprehensible to me:  demands of adult children and elder fraud.

Too often parents help adult children to get through a ‘rough patch’, but then it becomes a monthly deposits for life.  Sometimes the financial drain is astonishing.  “Many advisors say this problem dwarfs all others.  Some children never grow up to become independent, even far into adulthood.”  It is a difficult and embarrassing planning topic, an “emotional minefield”, but sometimes clients can’t accept the reality of their children.

Even worse is elder fraud.  “Never before in history have there been so many people over 60 years old with so much money.  The majority may not have enough money, but the surge in senior fraud is becoming a national epidemic.”  The average loss for victims of financial abuse is $140,500, according to the article.  “Scamsters disguise ‘educational seminars’ to offer sweepstakes, cash prizes, free meals where they often tout unsuitable investment products.”  Variable or index annuities are recommended in many cases where the product is simply unjustifiable.  Big rollover IRAs are tempting to these scamsters.  Also, with dementia on the rise, seniors are exploited by a guardian or power of attorney, which sometimes are friends or family members.

Seniors should never make an urgent decision, as there is never a need to decide quickly.  Seniors should understand what they are doing; if not, don’t do it.  Seniors should get a second opinion; it’s worth spending a little time and money to avoid losing $140,500. 

The more eyes on the situation, the better.

Tags: elder fraud; elder financial abuse

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