In a recent episode of her Women & Money podcast, financial expert Suze Orman responded to a listener’s concerns about gaining her elderly parents’ financial trust. The listener, Kim, shared that her parents keep their finances secretive, despite her being their designated financial power of attorney.
Kim explained that her parents, ages 80 and 81, recently purchased a $200,000 deferred annuity upon recommendation from their financial advisor – who is the grandson of the family’s previous attorney. However, Kim wasn’t aware of this decision when it occurred and doesn’t feel that her parents fully understood what they were doing or that they did indeed purchase the annuity.
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Orman emphasized the importance of having candid conversations with parents, especially as they age and are entrusted to their children’s care. “What’s interesting is that no matter how old we get or our parents get, we tend to act like we’re still kids,” Orman stated. “We tend to act that we cannot question their authority, that we have to do anything they say…You are no longer kids. Therefore, you have to stop acting like one.”
Orman encouraged Kim to open a dialogue with her parents, asking them practical questions about their financial and estate planning, such as: “Mom, do you know what would happen if Dad passed away? Would you be able to access the funds you need?”
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Beyond having a candid conversation with her parents, Orman urged Kim to have her parents listen to that particular podcast, during which Orman proceeded to tell them that they are in danger and need to trust their children to help with their finances.
“Mom and Dad, please don’t do this to your kids,” Orman said. “Stop acting so immature that you just don’t want to deal with this, because I know that you’re afraid to deal with your death. I know that you are afraid to make decisions because it’s hard to get old…but you don’t have a choice anymore.”
During the podcast, Orman also expressed concerns about the annuity purchase, stating that “on no level” was it wise for them to have any annuities. Orman has spoken out and warned her listeners about the dangers of annuities and that they should only be purchased in specific situations.
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On her website, she explains that annuities have limited flexibility and can lead to financial loss if cashed out early. She noted that some advisors will recommend annuities because they receive commissions on them and not necessarily because it’s the best move for their clients.
Elder seniors are frequently the target of financial exploitation. A press release from the Financial Crimes Enforcement Network (FinCEN) this year stated that between June 15, 2022, and June 15, 2023, 155,415 Elder Financial Exploitation (EFE) reports were filed, indicating around $27 billion in EFE-related suspicious activity.
The majority of EFE schemes generally involve theft or scams. FinCEN states that in cases of theft, it’s usually someone that the older adult knows and trusts, while scams frequently involve fraudsters outside the United States.
Orman’s advice shines a light on the challenges that can arise when adult children hold financial responsibilities for parents. Kim’s case demonstrates the importance of open communication, especially when dealing with complex financial products like annuities. And with elder exploitation on the rise, finding a trusted financial advisor and ways to support transparency and trust within families is more important than ever.
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This article ‘I Am The Financial Power Of Attorney, But They Don’t Tell Me Anything,’ Woman Seeks Suze Orman’s Advice On Gaining Parents’ Financial Trust originally appeared on Benzinga.com
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