Common-Sense Advice for Protecting Yourself from Financial Schemers

By Jerry Golden

My friend’s mother, who is in her 70s, got a letter in the mail printed on official-looking letterhead of a familiar bank, which informed her that a long-lost account had been discovered. It had money that she could reclaim if she telephoned before a certain date.

The woman had done business with that bank and wasn’t alarmed, but something made her call her daughter to talk it over. My friend did a Google search on the phone number and the results showed it was linked to several scams that had led to the theft of at least tens of thousands of dollars.

The next time I’m suspicious about an offer, I’m going to Google the phone number, too – or check the bank’s website.

However, there is a better way to protect yourself or your parents from financial scams: set up your financial plan in a way that protects it from those with evil intentions.

Put your parents (or yourself) on an allowance

If a certain amount of money appears in your bank account each month for specific expenditures, then very little money is even available to invest in a stock offered by a telemarketer or a new invention created by a friend’s brother-in-law.

When you get a monthly check from Social Security, an income annuity and perhaps a pension, you know how much is coming in — and which bills it will cover. You can set up your bank account to allow specific bills to be paid automatically each month.

Particularly as your parents get older, you can suggest some safeguards without making them feel like children who are having their freedoms restricted. Say, “Mom, we’d like to arrange your plans so that $2,400 is deposited in your account at the start of each month, and that should cover rent, groceries and utilities.” That should provide her some comfort. She’ll also know that her retirement savings are being carefully managed. She will still have income and savings, but in forms that are not scammable.

Invest in the right insurance from reliable companies

Another way to avoid the pressure of thieves is to make sure everyone in the family has the right insurance. For example, long-term care insurance is important to cover late-in-life health and caregiver expenses that come with aging. Also, longevity insurance represents future guaranteed income that is not subject to withdrawals.

You might be suspicious of life insurance companies behind these policies. That is why I recommend that you deal only with companies that are rated “A” or better. Most of these companies have been around for a century or more and have successfully endured recessions, wars and any number of calamities. They are stable.

Advice for the polite

Some people have a hard time saying “no.” For them, advance planning involves investing any extra funds in index funds and exchange traded funds (ETFs) that track broad market results. When your sister’s sketchy boyfriend whispers in your or your parents’ ear about a can’t-miss prospect, thank him for the great tip. But let him know that, unfortunately, all your money is tied up in index funds and ETFs. Even if he has a good idea, you can be happy doing what you’re already doing: making the same gains that the stock market does.