Aug. 03--It's an issue more complex and uncomfortable for some retirees than talking about what to do with their money after death.
Investment firms and nursing facilities are scrambling to deal with the effects of cognitive decline when seniors haven't prepared the proper legal documents, but the process is messy. Investor advocates worry about privacy issues or brokers overstepping their authority, for example, or health care facilities' conflicts of interest if they appeal to a court for guardianship so they can get Medicaid reimbursements.
"We're having to balance a lot of conflicting interests, but (elder) financial abuse is so large, we're trying to work together to make some positive steps in the right direction," said Judith Shaw, administrator of Maine's Office of Securities. Shaw is part of an advisory council of other regulators, investment firms, cognitive experts and investor advocates working on uniform state standards for dealing with suspected elder abuse. The group was launched nearly a year ago by the North American Securities Administrators Association.
"We still have way too many older folks believing that Nigerian prince is their friend," said Ron Long, head of regulatory affairs and elder client initiatives for Wells Fargo Advisors. Long is a member of the national securities association's advisory council.
Wells Fargo Advisors recently staged a six-city bus tour from Philadelphia to San Diego to raise awareness about elder financial abuse, both among consumers and those working in aging resource fields. Long has a staff of about eight workers who handle issues when brokers suspect their clients might be withdrawing funds because of a scam or ongoing financial abuse at the hand of a loved one, for example. The group is handling 100 to 150 complaints each month, up from about 30 in 2010, before the group was formed.
Long acknowledged concerns about investment firms putting themselves in the role of consumer advocate when firms and their advisers themselves are frequent targets of investor complaints.
"I hear that (concern), but at the same time, we have to do it all," said Long. "We want to hear if people think we've missed the mark."
Other big firms have added gerontologists or cognitive experts to their staffs and are reworking policies to deal with situations when advisers suspect their clients might be cognitively impaired.
Meanwhile, some local courts are balking at guardianship petitions by nursing homes attempting to help residents sell their homes or get signed up for Medicaid because the purpose is ultimately for the facilities to get paid, said Jennifer Cona, an estate planning attorney and managing partner at Genser, Dubow, Genser Cona in New York.
"It's a real issue, and becoming more so with the graying of America," Cona said. "When there's no family member to make these decisions, these patients are at real risk. They could be dismissed from a facility if no one is able to step up and take care of these things."
While regulators and courts sort out potential new standards, consumers can do a few things proactively to avoid bad outcomes, advocates say:
Have an emergency contact. Even if you've already designated a financial power of attorney -- someone who can act on your behalf if you become incapacitated -- consider providing an emergency contact with financial firms where you do business, Long suggests. This specifically authorizes the firm to contact someone with concerns, and that person can be a power of attorney or someone else, he said. And don't wait for old age to do this -- they are a good idea for a 29-year-old client involved in an accident or an 82-year-old acting confused, he said.
Think about gifts. Having someone with a power of attorney making gifts on your behalf while you're still alive is an area rife with fraud, so make sure you spell out in detail exactly what your power of attorney can and cannot do, notes "Addressing Memory Your Family," a recent white paper published by Bank of America Merrill Lynch. Gifting can also be an issue in managing someone's assets before they qualify for Medicaid in a nursing home situation.
Simplify. Early in retirement you might enjoy dabbling in a more complex array of investments, but managing multiple advisers and accounts can eventually be too overwhelming as you age or for a spouse after you die. Some experts advise clients in certain circumstances to spend down their liquid savings earlier to maximize Social Security benefits after age 70 or secure deferred annuity payments that kick in when clients are in their 80s.
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