Why, a client asked me, are seniors targeted by scammers? She found this personally offensive. I had a difficult time looking her in the eye and telling her the answer: because as people age, they lose their ability to detect bad actors, and their brains become less agile with financial concepts.
That double whammy of cognitive decline was described in a New York Times Article, “As Cognition Slips, Financial Skills are Often the First to Go.” Only within the past decade have researchers looked at decline of financial skills. The psychologists and neurologists agree, decline in mathematical ability may start early, even in one’s 50’s, and the decline may increase over time. Because retirees generally do not use math skills very much, they may not notice the decline.
Retiree’s adult children may not detect the problem. Parents may not want to discuss anything to do with money. If asked about finances, parents may become embarrassed, defensive, or confused, and provide vague or misleading answers.
Is there a subtle way to check whether your parents can still multiply and subtract? This is a challenging ability to observe about people, and it can be affected by fatigue or illness. Rather than testing your parents, it is more effective to help them surround themselves with a set of people who are allowed to check in on their finances regularly, to make sure no one is taking advantage of them.
JeanLuc Bourdon, a certified public accountant, was interviewed by the NY Times on this subject. “The protective tribe is important because senior abuse is often committed by a close relative or trusted professional. A tribe is needed to have checks and balances.”
Use power of attorney
One approach is to have co-agents under Power of Attorney in which one person has the right and responsibility to review financial statements and the other has responsibility to manipulate funds on behalf of the principal. This also ensures the person holding the Power doesn’t walk away with the principal’s money.
Attorneys hold different views on this approach – some are concerned that the two agents will disagree, to the detriment of the principal.
How else can the person who is assigned to be Power of Attorney be watched by a third person? There is a very useful service that can do this. In fact, it watches for any sort of financial fraud and abuse: EverSafe.
EverSafe, a technological solution
EverSafe provides a technological solution to monitoring all of a person’s accounts for unusual spending or withdrawals.
The accounts are linked and monitored, and reports can be viewed by a designated person. That person cannot manipulate accounts, only monitor for alerts of unusual activity from EverSafe.
The owner of the accounts may select any person they trust to receive alerts, and I would suggest that it be someone other than the PoA. This provides the checks and balances necessary to keep a senior safe.
The PoA has the permission and authority to manipulate funds appropriately on behalf of the principal, so bills are paid on time, and funds are invested wisely. But, someone else can be making sure that nothing unusual is occurring with the PoA serving in that role.
Hiring a Daily Money Manager
On a practical level, one can accomplish having “a tribe” by hiring a daily money manager to assist with the financial transactions that are part of daily life – checking bills for accuracy and paying them on time, reviewing health insurance explanation of benefits for correct claims processing, balancing checkbooks and reconciling charge accounts, and serving as a liaison with an accountant, financial planner and attorney.
The daily money manager can prepare reports and show financial statements to the client’s agent who holds Power of Attorney (PoA). This way, the daily money manager, who is regularly looking at the client’s bank statements, is aware if the person holding the Power of Attorney is using the client’s funds for his or her own benefit. In other words, watching to see if the PoA is stealing the principal’s money. Likewise, the PoA can be sure the daily money manager is honest.
Have a Team of Two
For your parents’ financial safety, encourage them to have someone review their finances before problems arise. Better yet, enlist two trusted adults.