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Technology to Protect Elderly from Financial Fraud

Financial technology companies start to cater to older people and their adult children

Note from Cornerstone:

The following article ran on wsj.com in May 2019.

Working on the frontlines with elderly clients, adult children, and their advisors, the risks outlined are real. Challenges protecting elder wealth is not limited to predators. As clients get older, some lose the ability to protect themselves from their own mistakes: Unneeded or unplanned purchases, inadvertent duplicate donations to charity, and over or underpaying bills represent some of the challenges.

The technology and resources outlined in the article sounds promising. Our own firm and our broker dealer LPL Financial has put technology and policies in place to help as much as we can from the advisor side.

I hope this article can help provide a little insight to the two-sided problem of protecting elderly from financial misdeeds.

Rich Arzaga, CFP®

Article written by Yuka Hayashi, The Wall Street Journal

A small but growing crop of financial-technology companies are offering online tools meant to help adult children manage and monitor their parents’ finances and well-being.

The rise of these services comes as financial companies look to technology to cater to the changing needs of an aging population. A bonus for such companies is the opportunity to develop relationships with adult children who are likely to be beneficiaries of a large wealth transfer in coming years from their parents.

The new tools often leverage forms of artificial intelligence to help users perform a range of tasks, from paying bills to monitoring financial accounts for suspicious activities. The services also can assist in curbing exploitation by unscrupulous caregivers or help family members restrict spendthrift behavior by parents in cognitive decline.

So far, the market for these services is in its infancy as most fintech products have been aimed at millennials. That is likely to change, though, given the wealth accumulated by retiring baby boomers.

“It’s terribly shortsighted,” said Theodora Lau, a former AARP executive who now runs a fintech consulting firm, referring to companies’ slow entry.  “There is so much they can do with the people who have money right now.”

An average of 10,000 Americans turn 65 every day, according to the U.S. Census Bureau. The average net worth of families headed by those aged 65 to 74 was $1.07 million in 2016, including primary residences, compared with $692,100 for all households, according to the Federal Reserve.

Among the pioneers in fintech services for older people are companies such as EverSafe, an account-monitoring tool aiming to fight financial exploitation, and True Link Financial Inc., which offers a prepaid debit card that can be customized to limit both how much money a cardholder can spend and where the cardholder can spend it.

Everplans provides an online archive for financial documents and wills, and Golden Corp. analyzes accounts to eliminate unnecessary expenses and helps with bill paying.

Wealthcare Planning LLC offers a tool that assesses older people’s financial decision-making capabilities and suggests specific steps for families to prepare for future challenges facing aging family members.

This new breed of fintech companies are, as of yet, largely untested in terms of effectiveness or safety, and will need to overcome skepticism to succeed.

“Anybody entering this field with software has got to figure out a way to make it extremely convincing that they are not in any way going to misuse personal information, or accidentally, enable misuse,” said Laurie Orlov, founder of Aging in Place Technology Watch, a research service.

Yet, there is a market need. The Consumer Financial Protection Bureau estimates that in 2017 seniors experienced 3.5 million incidents of financial exploitation, including fraud perpetrated by strangers or theft by caregivers and family members. Adults ages 70 to 79 are estimated to have lost an average of $43,300 in each reported case of financial abuse.

Most fintech tools for older people are targeted at their adult children. Many in the so-called “caregiver generation,” those caring for parents as well as their own children, are already familiar with online banking tools and are willing to try new services that might save them time.

“People don’t live with their parents anymore,” said Evin Ollinger, founder of Golden. “How do you take care of your parents when you live 3,000 miles away? You do it online, on your phone, and you are alerted when you need to help them out.”

In order for adult children to access their parents’ financial accounts, they must have the parents’ permission or power of attorney.

Mr. Ollinger, a 62-year-old tech entrepreneur in the Bay Area, came up with the idea for Golden after a bank alerted him that his 84-year-old father had missed his mortgage payment three months in a row. Going over his father’s bank and credit-card statements for the first time, Mr. Ollinger realized that while his father was otherwise independent, he needed help managing his money.

Mr. Ollinger shaved over $18,000 from his father’s annual expenses by canceling a 427-channel cable contract and subscriptions to professional magazines he no longer read. He also signed his father up for benefits from the Department of Veterans Affairs and negotiated to lower his mortgage rate.

As a lawyer for a company operating senior-living facilities, Andrea Teichman said she diligently monitored bank and credit-card statements and paid bills for her parents, who were both in their 90s and had dementia. So, when her mother died last summer, it came as a surprise to find a lien on her estate due to a credit-card debt.

Ms. Teichman, a 59-year-old resident of Medfield, Mass., then signed up with EverSafe, the account-monitoring service that her employer offered to its senior living residents as a benefit.  Through its credit-check function, it alerted her that 13 credit card accounts had been opened using her parents’ names and social-security numbers. Ms. Teichman learned the accounts were opened, in her parents’ names, by a home caregiver.

It took her family nine months to close the accounts and cancel the debts, which totaled nearly $90,000.

Fintech won’t address all the challenges of aging parents. “It doesn’t replace having conversations and going to their house and making sure you feel good about things,” Ms. Teichman said. “But sometimes, going to the house and doing the personal check is not foolproof.”

EverSafe was started in 2016 by Howard Tischler, a technology industry executive, and Liz Loewy, a former prosecutor who headed the elder abuse unit in the Manhattan District Attorney’s Office.  “It was my feeling that not enough was being done within banks, investment firms and credit unions to address this issue,” Ms. Loewy said.

EverSafe is available to some customers of Fidelity Investments and Raymond James Financial Inc., as well as through a direct online channel.

Recent regulatory changes are giving a boost to some of these new services by making it easier for financial institutions to contact family members of older customers and suggest optional online protection tools. The Financial Industry Regulatory Authority, or Finra, adopted a new rule in 2018 requiring securities firms to make “reasonable efforts” to obtain contact information for a person trusted by the account holder.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

#ElderCare

#ElderFraud

#PersonalAdvice

 

 

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Midyear Outlook 2019

We are pleased to announce the release of the LPL Research Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets, with investment insights and market guidance through the end of 2019.

LPL Research believes that even as investors face prospects for periodic bouts of volatility, emphasizing fundamentals will remain critical for making effective investment decisions. The LPL Research Midyear Outlook 2019 provides updated views of current fundamentals that should persist as shorter-term concerns fade and emphasizes four primary pillars for fundamental investing – policy, the economy, fixed income, and equities. As headlines change, look to these pillars and the LPL Research Midyear Outlook 2019 to help provide perspective on what really matters.

Progress on trade remains a key theme to watch. Economic (and political) self-interest most likely will bring the United States and China back to the table, although risks have increased. Clarity on cross-border transactions should lead to increased business confidence, higher capital investment, and improved productivity, likely extending economic and profit cycles.

Against this backdrop, progress on trade remains central to growth projections, and with negotiations stalling in the second quarter, LPL Research slightly reduced its 2019 gross domestic product forecast to 2.25–2.5%, supported by consumer spending, business investment, and government spending.

Turning to the bond market, yields are expected to move higher from current levels. However, the LPL Research team also reduced its year-end forecast for the 10-year Treasury yield to 2.50–2.75% after considering benign inflation, the Federal Reserve’s (Fed) decision to pause rate hikes, and trade-related signs of slowing. Given signals from the yield curve as well as several weaker economic reports, the Fed may be more accommodative in coming quarters.

Based on expectations for economic growth and monetary policy, along with the fiscal tailwinds of government spending, reduced regulation, and lower taxes, 2019 may be a good year for equity investors. Accordingly, LPL Research believes there’s a potential for 5–6% earnings per share (EPS) growth in the S&P 500 Index during 2019 and that the S&P 500 would be fairly valued around 3,000. If clarity on trade and monetary policy result in an improved outlook for corporate profits, LPL Research may revisit that forecast.

Although the economic environment has become more challenging, the pillars of fundamental investing still appear to be sound. Together, we will continue to monitor the impact of trade developments, and refer to LPL Research Midyear Outlook for insightful commentary to support investment decisions.

Midyear Outlook 2019

If you have any questions, please feel free to contact us.

#Investments
#MarketOutlook2019

Important Information

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Economic forecasts set forth may not develop as predicted.

All data is provided as of May 31, 2019.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

LPL Tracking 1-865246

Happy Birthday, United States of America

Dear (FIRSTNAME),

Happy Birthday, United States of America! As we celebrate our nation’s birthday, U.S. leadership on the world stage remains in focus. We received good news on the global trade front from the recent G20 Summit in Japan. President Trump and China’s President Xi agreed to a trade truce, clearing the way for the two nations to resume negotiations—and helping the stock market add to its impressive first half of 2019. In signs of thawing tensions, the next round of U.S. tariffs have been suspended indefinitely, and U.S. companies were cleared to sell certain products to Chinese telecom giant Huawei.

At the same time, we have no indications that the sticking points that caused talks to derail in May are any closer to being resolved, and existing tariffs remain in place. A broader agreement most likely can be reached this year—hopefully by fall—but we may have to endure more economic upheaval until then.

Closer to home, the Federal Reserve (Fed) has sent signals that it may cut the fed funds rate by .25% in July, thereby reversing its December 2018 rate hike. A potential rate cut could be considered insurance against further slowing of the economy, and it still appears the odds of near-term recession remain low.

Another positive is the Fed’s willingness to adjust its policy in ways that may help prolong the current economic expansion, which at 121 months is now the longest ever recorded. Despite its record-setting length, this cycle potentially has more room to run given its gradual growth trajectory in the United States and the lack of excesses building up since the 2007–2008 financial crisis. Fiscal stimulus put in place over the past two years by the Tax Cuts and Jobs Act of 2017 also helps.

Second quarter ended June 30, and earnings season, when most publicly traded companies release their quarterly earnings reports, is fast approaching. The favorable fundamental backdrop for the U.S. economy may provide support for further corporate earnings growth in the second half of the year and into 2020. Better than expected earnings could help drive stock market gains in the second half of 2019, although the pace of earnings growth may be modest as we continue to deal with tariffs and trade uncertainty.

Underlying economic fundamentals, along with a supportive Fed and progress on global trade, have the potential to enable the U.S. economy to continue to grow steadily through the end of 2019 and beyond. However, as noted in the recently published LPL Research Midyear Outlook 2019: Fundamental: How to Focus on What Really Matters in the Markets, we may have to tolerate more market volatility while trade details are ironed out, and some pullbacks in the markets should be expected. It’s important for all investors to be prepared to weather some volatility, and suitable investors can use it as an opportunity to rebalance portfolios to align with long-term objections.

Please feel free to contact me with questions, and happy Fourth of July.

Sincerely,

#MarketOutlook

Important Information

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Economic forecasts set forth may not develop as predicted.

All data is provided as of July 2, 2019.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-869511