Protecting Retiree Assets

Dorian Martin Health Guide
  • The headline of our local newspaper’s business section’s lead story was scary: “Sharks Circling Flush Retirees: More People Make Their Own – Sometimes Tragic – Decisions.” This headline is warning enough to elderly people who have their facilities; it becomes more ominous when you add Alzheimer’s disease to the equation.


    The story by Los Angeles Times reporter Jonathan Peterson describes how Americans, who have $2.9 trillion in 401(k) accounts and similar plans, are becoming easy targets for unscrupulous brokers. When employees retire, companies have no obligation to offer guidance to manage these funds.


    Peterson’s article noted an increasing pattern in which workers with limited investment experience are persuaded by marketing pitches about how to allocate their resources. Required warnings may not be stressed in the marketing pitch or may be omitted. Additionally, some brokers encourage retirees to invest in funds that pay lucrative sales commissions.


    How do we help our loved ones who have early stages of Alzheimer’s disease avoid these financial traps? Here are some steps that I brainstormed:


    - Find out where your loved one has his/her financial accounts.
    - See if the loved one has used the services of the same broker over the years. If so, find time to meet the broker.
    - If the loved one has not used a broker and plans to hire one (or is thinking about changing brokers), encourage the loved one to let you sit in on a meeting with the broker to hear the broker’s advice prior to signing any agreements.


    In thinking about this topic, I also decided that it was time to seek advice from my cousin, John, who is a stockbroker and a certified financial planner. Here is John’s list:


    - Get the financial institution to mail duplicate statements and other correspondence to you.
    - Always ask for references.
    - Check with the NASD, which is the largest private sector provider of financial regulatory services, for customer complaints. (There’s also information for retirees on this Web site:
    - Ask lots of questions and give lots of information; open communication is key, you would tell your doctor all your symptoms.
    - Your representative should ask a ton of questions. A multitude of questions can be asked, but some of the basics are:
    (1) What are your loved one’s income needs?
    (2) What is your investment experience?
    (3) What is your family’s health and your own health history?
    (4) What have you done as far as estate planning?


    - Consider a Certified Financial Planner as they are held to the highest ethical standards and have met rigorous education requirements.
    - Inquire about charges. Brokers and Certified Financial Planners work on a fee-only basis (one to two percent is normal) or get commissions for investments they place for clients. Beware if they want both of these options.
    - Inquire about qualifications and experience. Get referrals. Ask about the broker’s education, designation, and licenses held. Ideally, the broker would have at least five years of experience.
    - Interview multiple brokers before picking one.
    - Inquire about their approach to financial planning. A good consultant will know how to answer your questions. It’s a red flag if the person stumbles in his or her answer. The process that my cousin employs is to gather information, process the information, create a plan, make specific recommendations, and monitor the plan. This enables the investor and the broker to use a well-defined system to reach the desired outcomes.
    - Inquire about the licenses they hold (securities and insurance).
    - Ask if they have special designations for estate planning.
    - The Certified Financial Planning Board posts more questions to ask on their Web site (
    - Consolidate the loved one’s accounts so you only work with one broker.
    - Get the securities out of the safe deposit box; otherwise, you will have real challenges in getting this information when you need it.
    - Check the loved one’s tax return; reference the 1099’s and schedule D to find assets.
    - Watch the loved one’s mailbox, too.
    - Stay liquid. Investments have characteristics……one of them is the ability to turn them into cash (i.e. liquid assets). Real estate is not liquid. Annuities and other some other investments may be liquid but the surrender cost can be excessive, rendering these effectively illiquid.


    - Read up on Medicaid and Medicare. My cousin suggests understanding coverage for custodial or skilled nursing so that a long-term care policy can be purchased if needed or assets transferred under allowable rules. Always consult with a lawyer specializing in elder law about substantial asset transfers.


    - Transfer on Death paperwork, full or limited trading authorizations to a trusted family member or friend.
    - Deliver power of attorney in advance, set up living trust, and other trusts as situations dictate, and consider hiring a corporate entity as trustee.
    - Consult with your tax professional and attorney.
    - Find out whether your loved one’s representative is acting as a broker or advisor.


    John’s closing advice: “What you pay is important—what you get is critical.” Loved ones with Alzheimer’s disease may live a long time; therefore, it’s important to help your loved one guard their financial assets and make appropriate plans so that they are not duped by someone who doesn’t have their best interest at heart.

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Published On: January 26, 2007