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MORE THAN 92,000 people over age 60 reported losses to fraud totaling $1.7 billion in 2021, according to the FBI’s Internet Crime Complaint Center. That represented a 74% increase in losses from the year before.
With the population of older Americans growing, the need to protect this vulnerable population is more critical than ever. Enter the concept of a trusted contact.
The trusted contact has its origin in a Financial Industry Regulatory Authority (FINRA) rule issued in March 2020. It urged registered investment advisors to ask clients to name someone the advisor can contact in case of suspicious activity. If you’ve opened a new investment account lately, you’ve probably been asked for a trusted contact.
FINRA defines the role this way: “A trusted contact is an individual authorized by an investor to be contacted by their financial firm in limited circumstances, such as concerns about activity in the investor’s account or if the firm has been unable to reach the investor after numerous attempts.”
Who might be named? It’s most often a family member, but it can also be an attorney, accountant or another reliable third party. Whoever it is, the intent is the same—to provide “another layer of security on the account and puts the financial firm in a better position to help keep the account safe,” in the words of FINRA CEO Robert Cook.
Financial industry veteran Ron Long said the trusted contact concept arose from numerous experiences in which advisors had clients who were requesting funds from their accounts to pay for obvious financial scams. “Scammers often rely on victims succumbing to pressure to act fast and to avoid discussing the money disbursement with anyone,” said Long, a principal at Long Life Consulting of Seattle, who was previously the head of Aging Client Services at Wells Fargo.
“When an advisor is able to involve a trusted family member, often a son or daughter, they are able to speak with that loved one and successfully break the trance which the bad guy has over their parent,” Long said. “In other instances, the trusted contact acts as an ‘in case of emergency’ resource where an advisor observes signs of diminished capacity or has difficulty contacting an elder client.”
While the concept of a trusted contact is a step in the right direction, it’s not a substitute for a more comprehensive approach to safeguarding elders and their money. For one thing, the circumstances under which a financial firm is authorized to contact the trusted contact are limited, and don’t cover all the possible scenarios in which elder fraud might occur.
As demographics shift, and the demands on clients and their advisors expand, we need to evolve our approach to prevent elder fraud. This is especially important given the increasing rates of cognitive impairment among older Americans. Here are five steps the public and financial professionals can take to defend those most vulnerable.
As scammers become more sophisticated—and spoofing technologies have become ever more convincing—the responsibility falls on all of us to stay vigilant. The financial industry must take additional strides to better protect those at risk.
“In most instances, a client will never need an advisor to use the trusted contact,” Long said. “But like insurance, it is better to have the trusted contact and not need it than to need the trusted contact and not have it.”
D. Casey Snyder, CFP®, is a senior vice president of the Sedoric Group of Steward Partners, a financial advisory firm in Portsmouth, New Hampshire. In addition to his family, the passions that pull him away from his desk include cooking, gardening and mountain biking.
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Certainly a timely topic. I receive all the time texts and other messages apparently from companies I have accounts with, such as Amazon, Netflix, and credit card companies. All with urgent messages and suspect links. Our generation (I’m now 65) is so much more active online and with streaming services than we’re our parents so we will be so much more vulnerable as we inevitably age and decline. With my mom who recently passed at 97, this was relatively easy but still a concern. She recognized her increasing limitations and involved her sons more and more. In addition, she executed POAs to allow us access to her accounts. Finally, and perhaps most importantly, she was a careful, frugal and educated consumer who even in decline innately knew how to protect herself. Nonetheless there was quite a bit of effort on our part to monitor her activities and accounts. I feel for those without family. I also feel for those families without the open communication about money and aging. It is not easy to talk about but absolutely necessary. I only hope that my wife and I do it as well as my mother.
I turned 70 a few weeks ago and on that day received a few birthday greeting emails but also started receiving a lot of junk email that was targeted at my new demographic (elderly and possibly senile). The junk mail was stuff that I did not previously receive. Many were concerned about my bathroom success or other age-associated ailments. A “lawyer” in “Australia” wanted to send me money. A few others were also offering easy money. It took about a week for me to refine my junk email filters by examining the email source code and locating the actual sender URLs or other patterns that could be filtered. It is sad that just being of a certain age is thought to make someone an easy mark.
I turn 70 in a few months. I’ll be interested to see if I see a similar uptick in phishing schemes.
Surprised not hear more about family members who are committing fraud. Aware of a number of situations that this “wonderful” child robbed their parents for years…should make sure there is a check on children who seem too helpful.
Had to buy a new auto in 2021. Dealership required a wire transfer. Vanguard requires that wire transfers involve a Vanguard rep. While the rep was getting the details he casually (and non-threateningly) asked what the money was going for.
Bravo to him! Clearly was checking for any obvious scam in progress.
Yes, I was impressed by that, too! I did a wire transfer from Vanguard to buy my retirement home in Mexico, so that probably looked pretty suspicious. The VG rep asked me very pleasantly about it, and we chatted a bit about the home I was buying while he prepared the wire transfer.
Based on my pre-retirement career, I consider myself to be tech-savvy. But I’ve noticed that the faux emails, texts, and phone messages are becoming more convincing every day. It’s important to check anything that may have a real consequence, but never use the URL supplied by the email, text, or phone message. Go directly to the website for your financial service provider and check the status yourself. Your financial service provider will have a support email, chat, or telephone number if something seems awry.
Yes, it takes a great deal of vigilance as some of them are very convincing. The chances that you have a Netflix, Amazon account and/or are expecting a delivery from UPS or FedEx are pretty high in most cases for at least one of them. I delete these emails and texts urging me to click on the link to clear up whatever matter is wrong. It’s not full-proof, but I do set my phone to only ring if the number is in my contact list. Occasionally a call from an unknown number is legit and the person will leave message. I have yet to have a spam caller leave a message.
Me too – if it is that important leave a message, otherwise you won’t be hearing from me.
Casey, this is an important topic. In my physical therapy practice, I often find myself steering an older patient toward a family member for help with a variety of decisions, from home management to finances. There are a number of barriers, including poor self-awareness of cognitive decline and fear of dependence. Often, the family doesn’t recognize Mom’s increasing forgetfulness or mild confusion as dementia until a crisis occurs. We would all serve ourselves and our aging family better by frank recognition and discussion of the risks. It’s a tough topic.
Not everyone has family. From the NYT: “close to a million older Americans without a spouse or partner, children or siblings in 2019, including about 370,000 women over 75.” If you discount siblings the number without “family” is even higher. I’m a 75 year old female without a spouse or biological children and my siblings are in England.
Kathy, I know that you are an intelligent, thoughtful woman. I suspect you have an alternate plan worked out.
Possibly my CCRC will cope, but I am reacting to the automatic assumption that “the family” will pick up the slack. Even for people who do have family that is not necessarily a good assumption. Family members may be unwilling, unable, too distant or predators themselves. And the burden often falls disproportionately on the women. We need a better solution for everyone.
With all due respect, in my humble experience it isn’t generally the family that won’t recognize Mom’s increasing forgetfulness and decline, it’s Mom herself. Any suggestion from the kids to Mom that maybe she might need a little help every now and then is often met with an angry rebuff, many times to the point of cutting off whoever suggested it. Of course, anger and self-isolation such as this is very often an ominous sign, but the person in question usually doesn’t have the self-awareness to recognize it. All of which makes Mom an even easier mark for a scammer.Tough topic indeed.
So true, sad, but true.
As one of those elderly seniors – not yet cognitively impaired – although some readers may dispute that, I read about not only big schemes after our money, but every day there are scam phone calls and e-mails made to look like they are from Amazon, my bank and others.
In the last two days I have received several e-mails saying my Netflix subscription is expiring or I need to update my McAfee account. I never had subscriptions to either.
No doubt they are seeking personal info to access accounts, especially those appearing to come from my bank. Some of them do a very good job of looking real so it’s easy to see how someone of any age can be duped.
Maybe the best defense in the long run is relying on the old sayings – you don’t get something for nothing and if it sounds too good to be true, it probably isn’t true.
I just wish one of those guys with an inheritance from the king of Swaziland willing to share it with me if I just helped him buy a plane ticket would come through. Gee, I offered to get the ticket with my frequent flyer miles, but they always want cash.
The latest edition of the AARP Bulletin has a spread on the most recent scams. Although I’m a senior I haven’t seen any of them myself. Whether it’s because I have never had a Facebook account, or because my Twitter account has been dormant for years, or because my email provider (Proton) does a particularly good job of blocking spam I don’t know, but I just don’t see any. For a long time I kept my landline phones with the ringers turned off so the spam calls would go there instead of to my cell, and it seems the callers have yet to find me now I’ve cancelled the landline.
Don’t hold your breath! In my case it only took them about 6 months.