From the Summer of Love Exhibit at the DeYoung Museum in San Francisco
As we all know, there are scam artists, conmen (and women) and sleazy contractors and businesspeople out there, hoping to make a fast buck. We're all vulnerable to some extent, but as we get older, we can become much more of a target. It may be a combination of seniors having more assets, and at the same time, not being quick enough to recognize a fraudulent pitch. By some estimates, 10% of all older people experience financial fraud.
We recently read an article in The New Yorker about a truly nightmarish situation, where private guardians in Nevada with the collusion of some health care professionals and possibly also people working in the courts gained control of older people’s estates. People were literally seized in their homes and moved into assisted living. Their homes and possessions were sold off and the guardians used high fees to siphon off money from their estates. Often, the reason guardianship was awarded was for dubious or trumped up reasons, and the people involved were not present during the court proceedings and were not allowed to have their own counsel. Their efforts to regain control of their estates were re-buffed by the courts and even their children’s efforts to take over guardianship were brushed aside. This was plain and simple theft. Some of the perpetrators have now been indicted, but the damage has been done to perhaps hundreds of people.
This is one of the most outrageous scams that we have heard about. Most states require an older person to appear in court and to be represented by an attorney in any guardianship proceeding. Furthermore, the court would require an evaluation by an independent expert to determine the person’s capacity to make their own decisions, but that was not the case in Nevada. The Nevada legislature is currently working on a law that will give people the right to have legal representation in guardianship cases. But even in states with more protections, abuse by guardians is frequent. An organization called Americans Against Abusive Probate Guardianship (aaapg.net) has been formed to publicize abusive situations and to advocate for changes in the law that provide more protections against improper use of guardianship.
One way to protect yourself is to give a trusted friend or family member power of attorney. This is widely recommended by legal experts so that someone can act in your behalf in the event you are no longer able to manage your own financial affairs or make medical decisions. We will write another post addressing this particular issue.
Separating people from their money has gone on forever, but since the economic meltdown in 2008, there has been increasing focus on the actions of financial advisors and their investment firms that dumped risky investments like bundled mortgage securities on their clients, and then walked away with the profits, while their customers took the loss. Another strategy used by financial advisors is to put clients into investments where the advisor or his/her firm makes a bigger profit, rather than what would be the best investment for that person.
Accusations have recently been raised that an investment company that had a reputation for integrity, TIAA (Teachers Insurance and Annuity Association), had embarked on a path of doing what’s best for the firm and not for its clients. In an October 21 article, The New York Times summarized allegations by former employees that TIAA had been encouraging clients to move their funds from low fee, self-managed accounts into managed accounts without revealing that the investments have higher fees. Additionally, it was reported that employees had to meet quotas for how many investors were signed up for these funds.
As with many educators, our retirement funds were invested with TIAA, and we were very satisfied with them for many years. But about 8 years ago, we allowed one of their investment advisors to persuade us to move our funds into these managed accounts. Almost from the outset we became aware that these funds were not performing well. We had a benchmark to compare with, the funds that Judy’s father had bought from another company. Those funds did well when the TIAA funds did not, in part because of the difference in fees. When Steve retired, we moved our investments to that company.
To address these types of questionable activities, President Obama issued an order that required investment firms to work in their client’s best interest. President Trump recently rescinded those regulations. When people handle money, there is always temptation. Without rules or oversight, it’s a jungle out there.
Of course, there are also the everyday scams, door-to-door trolls looking to sell something they won’t ever deliver or that costs more than its true value, as well as telephone, email and other electronic media scams. Have you received this call? The caller identifies himself as with the Internal Revenue Service and says you owe money at will be fined or go to jail unless you pay. AARP posts information on various scams at https://www.aarp.org/money/scams-fraud/info-2017/imposter-scams-con-man.html?intcmp=AE-MON-BB-LL2. The bottom line is don’t give anyone over the phone or by email any financial information, including charities. Go instead to verified websites.
For more information:
“How the Elderly Lose Their Rights, The New Yorker. https://www.newyorker.com/magazine/2017/10/09/how-the-elderly-lose-their-rights
“The Finger-Pointing at the Finance Firm TIAA,” The New York Times, https://www.nytimes.com/2017/10/21/business/the-finger-pointing-at-the-finance-firm-tiaa.html?_r=0