It’s a story that may be sadly familiar to financial advisors.
People age 50 and over own 67% of U.S. bank deposits, according to the AARP. This, says the retired-persons’ advocacy group, make older people “targets of the fastest-growing form of elder abuse: financial exploitation.”
The average victim of this abuse loses $120,000, says the same source. That’s almost what the average age-50-plus household has in savings.
So, though the tale of Tischler’s mother may have triggered an unusual response, it’s far from unique.
Mrs. Tischler, a former accountant with a lifelong habit of financial prudence, had set herself up for a comfortable retirement, says Tischler, EverSafe’s founder and CEO.
But on a visit to his mother, Tischler saw a credit card bill addressed to her for $8,000 — an alarming amount for such a careful spender, he says.
As the story unraveled, a national-name company had phone-sold his mother an $80-a-month automobile-upkeep plan.
“Which may seem reasonable,” says Tischler, who’s been building technology companies since the mid-1970s. “Until you understand she had no license, no car and was legally blind.”
From there, Tischler suspects his mother “got on a suckers list.” By the time Tischler and his brothers could understand how bad the problem was, she’d already succumbed to a host of other pitches — some even more outlandish than the car-care scheme.
To meet her mounting financial obligations the retiree, in a more advanced state of cognitive impairment than her family suspected, had plundered her savings and made a hash of her finances.
“It was a spiral,” says Tischler. “She couldn’t keep up.”
By the time his mother died a few years ago, she’d been bilked out of her nest egg for things she didn’t need and on terms she didn’t understand.
“There should at least be an obligation to know your customer,” says Tischler.
But, as the serial entrepreneur discovered when he reached out to Elizabeth Loewy — for three decades an assistant district attorney in the Manhattan District Attorney’s Office and head of its groundbreaking Elder Abuse Unit — there isn’t.
In fact, very little of what had happened to his mother was illegal. The companies had secured the woman’s consent.
According to a five-year-old study by MetLife, criminal financial elder abuse costs its victims about $3 billion a year.
But Loewy, now EverSafe’s general counsel and head of industry relations thinks such crimes are under-reported in the first place. And they’re easily eclipsed by financial victimization of the elderly that, as Tischler’s family experienced, isn’t strictly against the law.
When you add this not-criminal activity, one study suggests the annual cost to victims of financial elder abuse balloons to $36.5 billion.
That’s the problem EverSafe was designed to fix.
Essentially it’s a permission-based account-oversight system that factors in established spending habits to identify and flag unusual spending and track suspicious-activity resolutions.
“The idea is to open up a family conversation about the issue and, in practical terms, keep an eye on things,” says Loewy, who in 2009 successfully prosecuted Brooke Astor’s son for plundering the famous socialite’s fortune.
EverSafe reports are viewable to the primary client and — where the client’s permission is given — to who Loewy calls “trusted advocates.” This category includes adult children, power-of-attorney holders, financial advisors, accountants and lawyers. And while activity reports can be shared, account balances can be shielded from any and all of these trusted advocates.
The pricing seems reasonable — though it’s tough to make comparisons where competitors are few and far between. It’s $7.49 a month for basic monitoring, $12.99 and $22.99 for tiers that include options around identity-theft prevention.
“We’re trying to make it really affordable,” says Loewy, who joined EverSafe in 2014. “We don’t want people to think twice about the cost of this kind of protection.”
Full Article & Source:
Can Account Watching Stop Financial Elder Abuse?