Everyone could benefit from a legal mentor: a trusted generalist with some knowledge of the law.
Financial elder abuse occurs each time someone illegally takes advantage of an elderly citizen’s money or property. In a recent study, Consumers Digest reported at least 5 million instances of financial elder abuse in the United States each year. Only 1 in 44 of these cases is ever reported, thus encouraging this insidious form of crime. But financial elder abuse is not always necessarily illegal. It can merely be inappropriate. In the ordinary course of business transactions where fraud isn’t so observable, a form of soft fraud occurs every day. A legal mentor can serve as a firewall, so to speak, for their elderly clients in many situations; but it is imperative that the client communicate with their attorney before the fact rather than after the fact, when possible. The elderly client need only memorize and employ these simple words: “Please call my attorney. His number is…”
There are honest and not so honest people everywhere. I once had an older friend who was suffering from the early stages of Alzheimer’s. He went to visit his broker at a large investment firm, but strolled through the wrong door. The broker across the table from him resembled his own broker in physical stature but the comparison stopped there. Before he left, my friend had opened a new account and purchased stock. When his wife opened the mail a few days later, she discovered the trade and called her husband’s authentic broker who was shocked and outraged by the incident. Meanwhile, the firm refused to reverse the trade. His wife subsequently closed their accounts at that firm. A cautious legal mentor would have recommended closing them at the first sign of dementia.
Financial advisers are under tremendous pressure to generate transactions. They not only have their own families to feed but their firms have voracious appetites, too. Their clients do not always understand that there are many layers of advisers all the way up to the Federal Reserve of the United States. Every layer is invested in its unique mission to keep the game alive. There are stock and bond traders, analysts, fund managers, and hosts of other intermediaries driving information and proffering rationales for so-called financial advisers on the street to justify their recommendations. It’s perfectly legal to make easily defensible recommendations that generate generous commissions. A dash of dementia and the soup’s on!
I wish it were not true but the elderly are simply more vulnerable to soft fraud. They are less knowledgeable about their rights in an increasingly complicated business world. They are predisposed to expect honesty and less likely to take action when maltreated. They are often isolated, alone, and mentally and/or physically disabled. Their scammers may be charismatic cold-callers and then, sometimes, even trusted fiduciaries. An impartial legal mentor can mitigate heartache with a phone call. “Please call my attorney. His number is…”
Jeff Barganier spent 2.5 years in a bank trust department, 2 years as associate general counsel to a real estate securities firm and 17 years as a financial adviser. Today, he makes his living as an attorney, writer and entrepreneur. Click here to read his full biography.
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The opinions expressed in this blog post are the author's own, and do not necessarily reflect the opinion of Red Oak Legal, PC.