Financial Scams on the Rise

Greetings!  This week it’s Charles doing the blogging.  Since becoming the LFS Compliance Officer, I’ve had the opportunity to read more about financial advising and the he industry in general.  One disturbing trend is the rise of financial abuse of the elderly.  The elderly in America are more than 45 million strong, and thanks to the aging of the country's baby boomers — 10,000 of whom turn 65 every day — it’s a fast-growing segment of the population.

Although definitive national statistics are hard to come by, one recent study by the state of New York said about 5 million older Americans throughout the U.S. are financially exploited each year.  Another study published last year estimated an annual financial impact of $36.5 billion.  Even at that, most experts believe the problem is significantly under-reported.  Cases often don't come to light because victims are embarrassed about having allowed themselves to be swindled, or reluctant to point the finger at the perpetrators — often people who are close to them.  The consequences of these cases can be devastating as wealth that has accumulated over a lifetime of hard work can dwindle or disappear.

Financial advisers tend to be on the front lines in the battle against elder financial abuse and are often among the first to spot red flags.  A recent survey of 591 advisers found that 62% have seen or suspected financial abuse of an elderly client at least once.  The problem for advisors is that there are no clear-cut ways to determine whether abuse is occurring and what tools are available for mitigation or intervention.  In fact, more than half of those advisors who suspected abuse — 56% — said they didn't report it for various reasons.

All of this is not just hypothetical for us at Linder Financial.  In recent months, we have had three events of attempted scams of our clients.  In two cases, it appeared to be efforts by someone to gain information about the client for possible thievery or commercial advantage by gaining access to the computer to “repair” non-existent problems.  The third was a direct attempt to transfer funds from a client account.  In all cases, there was no loss as the problem was noted and the proper action by TD Ameritrade and ourselves prevented any theft.

The message is clear.  Be alert and if you suspect there is a problem let us know promptly.  There is no shame in this process.  If you suspect there is a scam LET US KNOW!  We will also continue to watch all client accounts for spurious transactions as part of our normal tasks.