Adult children of elderly Americans often worry about their parents’ social and physical well-being, and a recent report from the New York Times shows how that concern should also extend to financial health.
The paper told the story of Aerielle Dewart, an 84-year-old Manhattan woman whose investment broker at J.P. Morgan made a series of irregular trades. Dewart had relied on the money to pay for assisted living services, as well as care for father Gordon and and an adult child with developmental disabilities.
But the broker in charge of the account repeatedly bought and sold shares in a way that netted him $128,000 in commissions, according to the Times, cutting the value of the $1.3 million account by about 10% — and charging a rate that was 10% higher than the going price for similar investment advisory services.
“I implicitly trusted [the broker] because my father did,” daughter Tracey Dewart told the paper, noting that her father had opened the account back in 2010.
J.P. Morgan eventually credited the Dewarts’ account for $84,000, and reached an undisclosed settlement over the remaining lost funds.
The Times used the Dewarts’ story to make a larger point about monitoring seniors’ finances and keeping tabs on investment accounts in general, finding 166 overall complaints over unauthorized trading in 2017. While many retirement experts recommend that investors only work with certified fiduciaries — advisors who are required to put their customers’ interests first, even if it means sacrificing commissions — it isn’t required of brokers and other financial professionals.
An Obama-era rule that would have mandated a fiduciary standard for all financial employees was recently struck down, the Times observed. Some reverse mortgage experts had predicted that rule would prompt more advisors to discuss home equity wealth, as it incentivized planners to look at every available source of retirement funding.
Check out the the full story at the New York Times.
Written by Alex Spanko