Share

Berge & Berge, LLP Blog

Monday, November 14, 2016

Four Warning Signs of Financial Elder Abuse

What are the signs that a senior citizen may be a victim of financial exploitation by a wealth advisor?

It is a sad reality that, of all the ways the elderly can be mistreated, financial elder abuse is one of the most common. At a time when one in thirteen financial advisors has been subject to some form of disciplinary proceeding, seniors and retirees are especially vulnerable.

Indicators That A Financial Adviser May Not Have Your Best Interests At Heart

1. Recommendations that ignore practical needs. When selecting investment strategies, your financial adviser should be taking into account your age, health, tax bracket, and annual expenses. When recommendations don't seem to be relevant to your needs, it may be time to worry.

For example, annuities can be very useful for some seniors with limited savings in need of a steady stream of income, but they are not for everyone. Annuity payments are taxed as ordinary income, not capital gains. They can be inflexible and tie up funds permanently. They may not be suitable for investors who have enough income and hope to leave money for surviving family members. If your advisor recommends a product like this, you should take a hard look at whether you really want or need it.

2. Recommendations that involve too much risk. If an advisor recommends a portfolio involving companies involved in untested new ventures, bonds with very poor ratings from rating agencies, or other investments unsuitable to retirees, alarm bells should go off. While some investors like to take chances on growth stocks and high yield bonds, retirees in their golden years, who cannot replenish their savings through work, need to be careful.

3. Advice that seniors borrow funds. A major red flag is advice to take on debt or a reverse mortgage to free up cash to invest, particularly if this advice is combined with an inappropriate or risky investment recommendation.

4. Too much trading, a/k/a "account churning." Too much buying and selling can be a warning sign that a broker is trying to generate commissions and fees, pursuing a risky trading strategy, or both.

Federal and State Laws May Help

Since last April, the new "Fiduciary Regulation" from the Department of Labor requires financial advisors to provide advice in their client's best interest. That this rule was needed at all is a sign of pervasive problems in the financial industry.

In addition, in California, by law, financial advisors are "mandated reporters," required to report any financial elder abuse by their colleagues. This requirement may not help you if it is your advisor who is engaged in financial elder abuse and no other advisor notices it.

Ask Your Attorney

Ultimately, a good lawyer may be your last and best line of defense. If you believe your financial advisor is mishandling your account or the account of someone in your family, an elder law attorney experienced in cases involving financial exploitation of seniors can investigate and can advise you the steps needed to stop the abuse, enforce your rights, and, if possible, recover lost funds.


Archived Posts

2019
2018
2017
2016
2015
2014


Estate Planning and Elder Law News



© 2019 Law Offices of Berge & Berge LLP | Disclaimer
1101 S. Winchester Blvd, Suite I-208, San Jose, CA 95128
| Phone: (408) 389-6980

The LifePlan Program | Estate Planning | Estate Tax Planning | Business Succession Planning | Probate / Estate Administration | Elder Abuse/Conservatorships | Trust and Estate Planning | Public Benefits | Special Needs Planning | Trust Administration | | About Us | Forms | Resources

Law Firm Website Design by
Amicus Creative