NEW YORK — Retirements are growing longer than ever, which means more decades to pay for — and more decades to avoid getting scammed out of your savings.
The financial and investment industries have noticed how often their elderly clients are targeted by fraudsters, unscrupulous family members and others. After seeing too many clients fall for fraudsters telling them they’d won the lottery — but would receive the jackpot only after paying a fee — Michele Kryger started the elder and vulnerable client care unit at AIG. It tries to protect elderly and other vulnerable customers, often by delaying disbursements when they try to withdraw their money for possibly suspect reasons.
Kryger recently talked with The Associated Press about what seniors can do to protect themselves, particularly those who want to handle their finances by themselves. The conversation has been edited for clarity and brevity.
Q: What kinds of scams were you seeing that showed a need for this kind of unit?
A: One of the very early cases we had involved an elderly client who requested a $72,000 withdrawal. It was unusual for the client, so his financial adviser decided to go out and meet at his home. When he talked to the client, the client indicated that he was going to come into a large sum of money, and he’d be able to replenish his account pretty soon. But first, he needed to pay this upfront sum. That’s a red flag.
And then his wife said, “Hey, we won the lottery! And by the way, why are we getting called by some foreigner?”
We tried to convince the client not to take the $72,000 out. We reached out to adult protective services, who also tried to talk him out of it. But then he submitted a request again a few days later, and it took co-ordination between the financial adviser, the daughter and us to make sure that he did stop the withdrawal. And he never did send that money out. So we were able to prevent a $72,000 loss.
Q. What’s the reaction when you tell a client to hold off on that withdrawal?
A. It’s tricky. When we delay disbursements, the person that’s the most upset with us is the person who wants the money.
Q: What kind of training are your workers getting, in looking for these red flags?
A: We have annual training, and we have new-hire training. But you have to continue the training because red flags change. Just in the last couple weeks, we saw scams involving liens on properties where our clients are told, “You have this lien on the property, and you have to pay a certain sum of money to clear it out.”
Q. What can people do to protect themselves?
A. In the cases that we handle, sadly, a lot of the clients do not have powers of attorney in place and the types of protections we would want to see. They don’t have a trusted contact, and I think that’s because they don’t want somebody else involved in managing their finances.
Those two types of protection are very helpful: To have a trusted contact who’s different than your power of attorney provides a check and balance.
Q. Power of attorney means?
A. Power of attorney is somebody that an individual selects to manage their finances, health or different types of activities.
What we like is where you have a power of attorney that identifies two attorneys-in-fact who have to act jointly on behalf of the client. The reason I like that is because we’ve had withdrawal requests come in from one of the attorneys-in-fact that seems unusual. And we take a look at the case, and we say, “Hey, we can’t accept this. It needs to be signed by both.” Oftentimes, it hasn’t come back, which means we may have prevented some loss for our client.
Q. And trusted contact?
A. The trusted contact is a relatively new concept. There was a rule passed in 2018, and it tells financial advisers and broker-dealers you need to make best attempts to obtain a trusted contact from a client. And that trusted client contact becomes an added resource if we have concerns that an individual is suffering from cognitive health issues or may be subject to financial exploitation.
We’re hoping that more and more trusted contacts are signed and provided to us.
Q: Do you see certain types of clients getting disproportionately targeted?
A: From an age standpoint, the age that we see the most activity impact is in the 80s and 90s.
But we also handle any case involving an adult where we think that there are cognitive concerns. We’ve had cases where an individual was in the hospital, temporarily incapacitated, and the brother had him sign an irrevocable beneficiary form. The client did not know what they were signing.
Q: It’s often a family member or someone the client knows who’s trying to get the money?
A: Yes. Most people don’t think something like this can happen. I don’t want to think that my kids can exploit me either. But it exists. It’s real.
Q. What tips would you give elderly clients?
A. Be prepared for a decline in cognitive ability. It’s something that’s just natural with age.
I don’t like to see those cases where we have a client who could be being exploited or doesn’t seem to be managing their finances in the way that they originally intended, and we’re not able to have a conversation with them because they don’t appear to be cognitive. But when we have no family member involved, no power of attorney and trusted contact, it really ties our hands as far as what we can do.
And if you’re caring for somebody else: Just talk to them. Don’t let them be siloed. Talk to them about what they need to do to prepare for the future.