Do this one thing to help prevent your parents from being scammed

By Beth Pinsker

'I felt like I was talking to a robot,' said one adviser about a client who was ensnared in a romance scam

You can put safeguards in place before aging parents get hooked by scams.

Got a question about retirement? Fill out our questionnaire or write to me directly at beth.pinsker@marketwatch.com (please put "Fix My Portfolio" in the subject line).

Financial adviser Michael Haubrich was racing against time to figure out how to help a pair of his firm's clients who he thought were being lured by a scam. They were asking to quickly liquidate a huge sum of money from their accounts to buy a condo in Mexico - which was out of character for them as cautious, retired schoolteachers from the Midwest who didn't have a history of cognitive decline.

His team asked follow-up questions to see if they could figure out what was going on. On a subsequent phone message from the clients, the advisers could hear the other spouse in the background on another line talking to scammers, who were impersonating the FBI and threatening arrest for drug trafficking. The scammers had known they were traveling to Mexico, as well as many other details about the family.

"I called up the client and asked what's really going on. The client broke down crying," Haubrich said. "That's when I said, 'I have to call your daughter.'"

Family involvement was enough to stop the continuing scam, but some damage had already been done. "When we came into the scene, the trap had already been set," Haubrich said. "Their call was just to get the final money, but the bad guys already had them get about $100,000 out of the bank."

This is an example of how a trusted contact on a financial account can be a backstop against elder fraud. A trusted contact is a different role than a power of attorney, trustee or joint owner, because the trusted contact has no standing permission to see account details or transact on behalf of the primary person. The purpose is to have somebody to call in case the financial representative senses something amiss: unusual withdrawals, missed payments, confusion, forgetfulness or other signs of cognitive decline. An incapacity agreement can further provide the rationale for springing into action.

It's becoming more common for brokerage firms and independent advisers to have clients list a trusted contact or sign a more detailed agreement specifying when to call for help - although it's rare that they are used. In 43 years of practice, Haubrich has only had to activate this step three times.

Adviser Dana Anspach, whose practice is in Scottsdale, Ariz., and who is the author of "Living Off Your Acorns," has only once had to call a trusted contact in an emergency. In most cases, the cognitive decline of her clients is slower and more gentle, and family members step into help and then gradually take over.

In the worst case she has seen, one of her clients was entangled in what appeared to be a romance scam. The 67-year-old woman was asking for a string of withdrawals to send to a man in Turkey, who said he was going to come to the U.S. and buy her a house; he just first had to clear up travel problems which kept delaying him.

"I felt like I was talking to a robot - like she was hypnotized," Anspach said. "We felt like legally it was crystal clear, and we had authority. So we called the trusted contact, her adult daughter. She responded immediately, and said, 'I'm so glad to hear from you. I wanted to reach out to you, but we didn't have your contact. I think my mom is subject to a romance scam.'"

The client ended up just getting mad at everyone, and Anspach couldn't continue as her adviser. What happens in cases like this is that either the client comes to their senses at some point, or goes broke, or their family has to go through the steps to have them declared incompetent and have their financial powers handled by a conservator. But at least by being alerted to the scam, they could start taking the necessary steps.

"I don't think there's any foolproof method of dealing with cognitive decline or fraud where the person truly believes what's being told to them," said Anspach. "But having a trusted contact listed is certainly better than not having one."

Start the conversation early

Advisers say the best time to set up a trusted contact is when you start a relationship with a financial representative or institution, as part of the onboarding process. If you're not prompted to name one, then ask to.

The next step that Haubrich likes to take after meeting with a client and learning about their family is to have a meeting with any key people involved. Most of all, he wants to make sure that the trusted contacts understand their roles and that they are capable of handling the task. Then he has the start of a relationship with them, and everyone gets comfortable with the idea that managing an older person's finances eventually becomes a team effort. The earlier you get started on that path, the better.

If any clients balk at bringing their trusted contacts into the conversation - as people tend to be private and protective about their finances - Haubrich simply asks why: "Is this person really your trusted contact? If you have any reason not to have them in, then you should maybe pick somebody else."

Ross Kirwan, a wealth adviser for Carnegie Private Wealth, also makes naming a trusted contact part of his onboarding practice - and it came in handy when one of his new clients immediately showed signs of falling for a scam. At their first meeting, he learned that the client, who was in her late 60s and showed no signs of cognitive decline, had been previously defrauded out of $20,000. "I said, 'How about we do a trusted contact?'" Kirwan recalled.

Then, in the process of transferring her accounts from the previous custodian to Kirwan's firm, the client was contacted by a scammer and told that her accounts were compromised.

"They told her she had $200,000 at risk, and they have to move fast to transfer the money to them to keep it safe," Kirwan said. "The good news is that the custodian doesn't just send money out - there has to be a signature. So we called the trusted contact, who was her son, right away. Once it was flagged, everything got cleaned up quickly."

You can also join the Retirement conversation in our Facebook community: Retire Better with MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

More Fix My Portfolio

-- My relative, 80, was about to be scammed out of $40,000. Here's how I stopped it.

-- We're in our 70s and don't trust our family to handle our estate. What can we do?

-- Can dementia be funny? How about elder scams? 'The Conners' mines difficult aging topics for laughs

-Beth Pinsker

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-26-26 1104ET