Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Rick Ferri »

Lisa Bragança, JD, MBA, is my latest Bogleheads on Investing podcast guest. She is a former Branch Chief in the Division of Enforcement of the Chicago Office of the Securities & Exchange Commission where she handled investigations of accounting fraud, Ponzi schemes, insider trading, churning, and unsuitable investments. Today, Lisa is in private practice at Bragança Law.

Podcast link - Episode 036: Lisa Bragança, host Rick Ferri

Throughout her career, Lisa has been an advocate for the rights of people with physical, cognitive, and psychiatric disabilities. She previously served as counsel in three statewide class actions seeking to compel the State of Illinois to comply with the Americans with Disabilities Act. She also regularly speaks about elder financial exploitation, securities regulation, recovering investment losses, and cryptocurrency.

This podcast is hosted by me, Rick Ferri, CFA, a long-time Boglehead and hourly-fee investment adviser. It is part of the John C. Bogle Center for Financial Literacy BogleCenter.net, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012.

Your tax-deductible donation to the Bogle Center is appreciated.

Your Host,
Rick Ferri

Bogleheads is a registered trademark of the Bogle Center. All rights are reserved.
Last edited by Rick Ferri on Sat Jul 24, 2021 5:42 pm, edited 1 time in total.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by nedsaid »

This is a great topic for discussion. Elder abuse and defrauding the elderly is a big problem and one that needs a lot of discussion now. Thanks Rick for your excellent work on these podcasts.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
To clarify, Lisa didn’t say not to invest in annuities. She said based solely on trying to read the contracts and trying to figure out what the contracts say no one should buy an annuity because you can’t figure it out - not even the broker who sold it to you can explain what’s in the contract. She is a lawyer, and she can’t figure them out, and needs to hire insurance underwriter experts for cases to tell her what a contract says. That’s absurd.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Rick Ferri wrote: Sat Jul 24, 2021 7:19 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
To clarify, Lisa didn’t say not to invest in annuities. She said based solely on trying to read the contracts and trying to figure out what the contracts say no one should buy an annuity because you can’t figure it out - not even the broker who sold it to you can explain what’s in the contract. She is a lawyer, and she can’t figure them out, and needs to hire insurance underwriter experts for cases to tell her what a contract says. That’s absurd.
Great podcast, as always. You have an easy conversational style, and these podcasts are always enjoyable to listen to.

Right about minute 44:00 is the discussion about annuities. I agree that she was talking about the complex language of annuity contracts, and the fact that the broker can't explain the language, as being the reason that she would not recommend buying an annuity. However, I can see how her language could be interpreted to recommend never buying an annuity for any reason.

Speaking as someone who drafted annuity contract language for my former employer, I can see how annuities seem infernally complicated to the vast majority of people. Even a contract as simple as a MYGA can run to about 15 typewritten pages, plus the "Buyer's Guide to Annuities" which is mandated to be delivered to the consumer by the majority of states. An indexed annuity is even more complex. And if you go all the way up to a variable annuity, you could be talking about a prospectus that runs for more than 100 pages.

Many Bogleheads find a lot of value in two types of annuities - the single premium deferred annuity (SPIA) and the multi year guaranteed annuity (MYGA). Both of those annuities can be pretty easily explained and understood by the average consumer/investor. And I expect that their contracts are among the shortest annuity policies.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by z3r0c00l »

Thanks for spreading the word, my parents, hardly fragile or vulnerable, were talked into two costly and poor performing annuities as well as life insurance, a terrible long-term care insurance for which they received a settlement after a class action lawsuit, not to mention some really expensive mutual funds, all by a "nice young man" at the bank. Untangling all of that has taken years. Can't imagine how bad it must be for the truly vulnerable.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Stinky wrote: Sun Jul 25, 2021 5:51 am [
Speaking as someone who drafted annuity contract language for my former employer, I can see how annuities seem infernally complicated to the vast majority of people. Even a contract as simple as a MYGA can run to about 15 typewritten pages, plus the "Buyer's Guide to Annuities" which is mandated to be delivered to the consumer by the majority of states. An indexed annuity is even more complex. And if you go all the way up to a variable annuity, you could be talking about a prospectus that runs for more than 100 pages.

Many Bogleheads find a lot of value in two types of annuities - the single premium deferred annuity (SPIA) and the multi year guaranteed annuity (MYGA). Both of those annuities can be pretty easily explained and understood by the average consumer/investor. And I expect that their contracts are among the shortest annuity policies.
Great input. Thanks!
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by dharrythomas »

Rick,

Thanks, enjoyed the podcast as always. I appreciate all you do here.

Harry
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by ralph124cf »

Many retired people on this board also find that the TIAA stock and Real Estate fund based variable annuities are quite worthwhile. Admittedly, these are somewhat complex, but you do get the full value of the underlying funds.

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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Fallible »

Excellent interview with chilling examples of abuse and fraud recounted from both Lisa Bragança and you, Rick, based on your long professional experiences. She explained how even good estate plans, even well-drafted Trusts, can be undercut by a wrong move that leads to unintended financial fraud. And the abusers and fraudsters are always out there, waiting for a wrong move.

Hope there will be more podcasts on the subject and thanks for all of them and the work put into creating the transcripts. :thumbsup
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by FoolStreet »

DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by adamthesmythe »

FoolStreet wrote: Sun Jul 25, 2021 5:27 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.

...or MYGAs...

...but not those other kinds.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by DanFFA »

FoolStreet wrote: Sun Jul 25, 2021 5:27 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.
Immediate Annuities were recommended on multiple occasions. I recall some posts where Taylor mentioned them himself. Sidenote - It's amazing that he's still on the forum from time to time. Much respect.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by WoodSpinner »

Rick,

Enjoyed the Podcast and would really like to dig deeper into what a plan might look like to protect against Alzheimer’s, Dementia and/or Elder abuse.

Do you have anything in place?

It’s an issue I am concerned about but am not sure how to build out a plan.

Thanks

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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by teniralc »

Rick Ferri wrote: Sat Jul 24, 2021 5:24 pm Lisa Bragança, JD, MBA, is my latest Bogleheads on Investing podcast guest. She is a former Branch Chief in the Division of Enforcement of the Chicago Office of the Securities & Exchange Commission where she handled investigations of accounting fraud, Ponzi schemes, insider trading, churning, and unsuitable investments. Today, Lisa is in private practice at Bragança Law.

Podcast link - Episode 036: Lisa Bragança, host Rick Ferri

Throughout her career, Lisa has been an advocate for the rights of people with physical, cognitive, and psychiatric disabilities. She previously served as counsel in three statewide class actions seeking to compel the State of Illinois to comply with the Americans with Disabilities Act. She also regularly speaks about elder financial exploitation, securities regulation, recovering investment losses, and cryptocurrency.

This podcast is hosted by me, Rick Ferri, CFA, a long-time Boglehead and hourly-fee investment adviser. It is part of the John C. Bogle Center for Financial Literacy BogleCenter.net, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012.

Your tax-deductible donation to the Bogle Center is appreciated.

Your Host,
Rick Ferri

Bogleheads is a registered trademark of the Bogle Center. All rights are reserved.
I found her comment (paraphrasing) that we might plan for cognitive decline a lot sooner (like in our 40s), quite helpful. Though many of us would like to think we'll be sharp as a tack through our 80s, that is not always the case and decline starts sometimes a lot sooner than we even realize. I also found it helpful to hear that someone like her is so accomplished but that she can't get her own mother to share personal/financial information with her, her own daughter and an expert in the field. Reminds me how these topics need to be continually brought up. Thanks for keeping this topic in our discussions.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Bruce »

Rick

Another great podcast! Thanks for doing these and thanks to your outstanding guest.

As far as beginning to think about steps to guard against elder fraud, here is one short read Vanguard has on their website.

https://investornews.vanguard/know-the- ... loitation/
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Thought this personal experience story of elder fraud off the Fidelity website was also worth reading

https://www.fidelity.com/viewpoints/wea ... lder-fraud

Here is an excerpt

Key takeaways
Realize that your loved one is a potential target.
Remember there is fear and shame when scammed, so be empathetic.
Involve trusted family members in money management jobs.
Engage multiple family members, to reduce the potential for a single point of failure.
Keep up to date on local and COVID-related scams.
Last year, Mike Conner,* age 57, a chief marketing officer for a health care technology firm in Chicago, offered to help his 86-year-old father with taxes. While visiting his father in Dallas, Conner had noticed that his father, a retired aerospace engineer, had letters on his desk from the Internal Revenue Service related to an unfiled tax return.
His father had an explanation. He was a widower who had remarried a year earlier, and the couple was splitting their time between his home in Dallas and her home outside Phoenix. "He was thrown by how to handle their new marital status and different state residencies, so he had simply done nothing," says Conner.
Conner figured he would ask his own accountant to lend a hand, and that it would be a fairly straightforward task. It hasn't been. As Conner and his father sorted through online documents (bank accounts, brokerage accounts, and credit card statements) to get the information needed to file Conner’s father’s past taxes, Conner made a startling discovery. "Over the course of the previous 18 months, my father got suckered into signing up for 94 financial and investment newsletters from advisory services, totaling $56,000 in ‘subscription fees,’ which he paid for with his credit cards," says Conner. "His retirement portfolio is worth around $500,000."
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Ependytis »

Rick, elder financial abuse is a great topic. Thanks for selecting this topic. It seems like a lot of financial abuse can happen before a trusted person realizes the elder is being ripped off. It made me think, is there some sort of monitoring service, like for credit cards, that can monitor for fraud and send an email to the user as well as a trusted person to make sure the charges are legitimate? If the charges are really out of line, can they actually freeze the account like with credit cards?
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by cheese_breath »

FoolStreet wrote: Sun Jul 25, 2021 5:27 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.
And MYGAs.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Kumsajack »

Thanks Rick !

As usual, a quite prescient topic and very substantive. I'm sharing it out to many family and friends.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by HomeStretch »

+1 great topic

Elder predators are every where…
In real life, I was very startled and dismayed by elder predation by my parents’ and in-laws’ long-time local banks. While doing routine banking in person with tellers, each was steered by the teller over to the bank’s investment rep who proceeded to sell them annuities, life insurance (“for the grandkids”) and enroll them in high fee/high ER AUM arrangements for modest portfolios.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Rick Ferri »

The transcript of this podcast is now available:

Transcript for Episode 36
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Excellent informative podcast. Thanks very much.
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Post by alcon50 »

Terrific broadcast. Gave me a lot to think about.

Thank so much for doing this Rick. It is a great service to this community.

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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by fposte »

Agreeing with the others that this was extremely useful: sobering with some good reminders about advance planning while you can.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by bogledogle »

The topic reminded me of a movie "I care a lot" on Netflix. It is very entertaining.

https://youtu.be/lXrnUzP5Su0
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by nisiprius »

Fantastic interview, particularly the part on elder abuse.

With regard to
The lawyer, actuaries who write it, and me, and these are the only– and the lawyers who represent the issuer or the broker, eventually– but yes they’re ridiculously complicated. I have to hire an expert to figure out what the heck does this annuity really mean. It’s ridiculous, so yeah, for that reason alone I would tell people never invest in an annuity, any form of annuity, because I don’t know of a broker who sold one that can explain it.
the only issue here is that the word "annuity" has come to be a nickname for "variable annuity." I think she's right about variable annuities (and so-called "fixed indexed annuities.") An insurance agent once convinced me to look at a half a pound of literature for a variable annuity and I actually tried to read the prospectus. After about twelve pages I gave up and decided I would just start counting the number of different kinds of fee that I would be paying. After I got to seven fees, I shrugged.

But a single premium immediate annuity is not hard to understand. I really did read the entire agreement. The parts describing the annuity itself were literally less than three pages, and most of it was summarized in a little chart at the beginning. There were then about ten pages that did make my eyes glaze over but it was all about the way in which the IRS considered the annuity to meet the RMD requirement, and some things about the domicile of the insurance company and so forth. The financial part of the agreement was short and easy.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by LisaBraganca »

I would like to clarify my comments on the podcast about annuities.

I have no qualms with single premium immediate annuities and other relatively simple annuities. I like defined benefit pensions - which are essentially annuities. My only complaint about simple annuities is that they are sold as investments yet regulated by insurance commissioners. Otherwise, I like SPIAs.

The products I was referring to on the podcast are the opaque and confusing annuities like fixed indexed annuities (aka equity indexed annuities) and variable annuities. These are products that the selling agents most often do not understand. What the selling agents do understand is the big commission they are earning on the sale of these products. The fact that these products pay big commissions to selling agents and often pay upfront bonuses to the purchaser are red flags to me.

I love what the Bogleheads do and hope to contribute in whatever small way I can.

Lisa Braganca
While I am a lawyer, this is not legal advice. Nor is this investment advice. Just my humble opinion based upon my experience.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Welcome! I confirm LisaBraganca is the person interviewed by Rick Ferri.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by nisiprius »

LisaBraganca wrote: Wed Aug 04, 2021 12:36 pm...I would like to clarify my comments on the podcast about annuities...
Thank you for your reply and for participating in the forum.

One of the problems with "annuities" is that the word is used as a nickname for a variety of completely different products. Back when I was actually shopping for an SPIA, I called a financial advisor thinking I needed help. And he had me very confused. I think he was trying to be a good guy... urging me to just stick with my TIAA (variable) annuity... and saying that the "annuity" I was thinking of buying would subject me to "surrender charges." And I was scratching my head and saying "I don't think there are surrender charges," and he was saying "Trust me, there are." Eventually I concluded that he actually did not know what a single premium immediate annuity is. He heard the word "annuity" and assumed the worst.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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LisaBraganca wrote: Wed Aug 04, 2021 12:36 pm I would like to clarify my comments on the podcast about annuities.

I have no qualms with single premium immediate annuities and other relatively simple annuities. I like defined benefit pensions - which are essentially annuities. My only complaint about simple annuities is that they are sold as investments yet regulated by insurance commissioners. Otherwise, I like SPIAs.

The products I was referring to on the podcast are the opaque and confusing annuities like fixed indexed annuities (aka equity indexed annuities) and variable annuities. These are products that the selling agents most often do not understand. What the selling agents do understand is the big commission they are earning on the sale of these products. The fact that these products pay big commissions to selling agents and often pay upfront bonuses to the purchaser are red flags to me.

I love what the Bogleheads do and hope to contribute in whatever small way I can.

Lisa Braganca
While I am a lawyer, this is not legal advice. Nor is this investment advice. Just my humble opinion based upon my experience.
Thank you for the clarification.

I believe that what you’re saying is what the vast majority of Bogleheads believe. While there are some excellent “simple” annuities like SPIAs and MYGAs, the majority of annuities are complex and expensive products that pay big commissions to those who sell them. Consumers are well advised to steer clear of such products.

And welcome to the Forum!
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by FoolStreet »

cheese_breath wrote: Mon Jul 26, 2021 9:08 am
FoolStreet wrote: Sun Jul 25, 2021 5:27 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.
And MYGAs.
True. Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Elsebet »

Enjoyed the podcast, thank you Rick and Lisa.

As a DINK (dual income no kids) couple without much close family left, I'd love to hear a podcast on what steps we can and should take to guard against elder fraud/abuse in the future.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by sg1223 »

Thank you for this- just came across this podcast and subscribed ( "followed" ) on Apple Music.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by bradinsky »

Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by prd1982 »

bradinsky wrote: Wed Aug 11, 2021 7:08 am
Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
My translation — possibility of high reward (the cheese) but also has high risks (having the trap spring on you).
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Stinky »

prd1982 wrote: Wed Aug 11, 2021 7:19 am
bradinsky wrote: Wed Aug 11, 2021 7:08 am
Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
My translation — possibility of high reward (the cheese) but also has high risks (having the trap spring on you).
I understand the "high reward". MYGAs do provide a higher reward in today's market than CDs, bond funds, cash, etc.

I'm not understanding the "high risks". Since the insurance regulators significantly increased the capital and reserve testing standards for life insurance companies in the mid-1990s, I can't think of a single insolvency of a significant life insurance company. The life insurance went through 2000 and 2008 with essentially no solvency issues. Yes, there were major insolvencies in the early 1990s (like Executive Life), but the root causes of those major insolvencies have been addressed by the stronger regulatory protections enacted shortly thereafter.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by FoolStreet »

bradinsky wrote: Wed Aug 11, 2021 7:08 am
Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap.

Some people enjoy going to the steak dinner to learn about 'risk management in retirement' but someone buys the insurance to pay for everyone's steak dinner. But for the average person who doesn't understand stocks/bonds and thinks they can trust the insurance salesperson who sells a product that is as safe as CDs but with the upside of the stock market and guaranteed not to lose money.... they should beware.

So, I forego the MYGAs, and just find a simple bond index fund that I can live with as part of my asset allocation. Keep it simple.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by bradinsky »

FoolStreet wrote: Fri Aug 13, 2021 12:13 am
bradinsky wrote: Wed Aug 11, 2021 7:08 am
Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap.
n
Some people enjoy going to the steak dinner to learn about 'risk management in retirement' but someone buys the insurance to pay for everyone's steak dinner. But for the average person who doesn't understand stocks/bonds and thinks they can trust the insurance salesperson who sells a product that is as safe as CDs but with thea upside of the stock market and guaranteed not to lose money.... they should beware.

So, I forego the MYGAs, and just find a simple bond index fund biggest downside that I can live with as part of my asset allocation. Keep it simple.
Fool,
I never was solicited & sold a MYGA by an insurance agent & FWIW I’m a very difficult person to sell anything to. I went out seeking something safe that would give DW & I a return that was greater than a CD & ended up with a 5 year, 3.05% MYGA. Actually, the process was very similar to purchasing a CD. Blueprint income was great. ZERO SALES PRESSURE. I would bet that many here would love to have it! It was offered by an A rated company & our state guarantee limit of $250K is slightly above the final value at 5 years out. You might be surprised if you actually made an effort to explore what’s offered at Blueprint, or Stan the Annuity Man, before judging. Worlds better than the paltry returns of the best CD’s currently available. In my view, the only significant downside is the lack of liquidity. If needed, we are only able to access 10% of the value each year. For us that is not an issue. At this point we have way too much cash earning very little.

Thanks again Stinky for your help/advice!!
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Stinky »

FoolStreet wrote: Fri Aug 13, 2021 12:13 am
MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap.

[snip]

So, I forego the MYGAs, and just find a simple bond index fund that I can live with as part of my asset allocation. Keep it simple.
Have you ever looked at MYGAs for yourself?

In my experience, the "upsell" that you're concerned about doesn't exist with the annuity marketers I've dealt with. For example, Blueprint Income, with whom I've done most of my business, has put ZERO pressure on me to purchase anything beyond what I wanted. I want a MYGA - they sell me a MYGA - simple as that. Check out their website if you're interested. https://www.blueprintincome.com/

My ladder of MYGAs, constructed over the last 12 months, has an average interest rate of 3.00% and an average term of just over 5 years. That handily beats most all bond funds. I'm willing to trade a little complexity for a much higher interest rate.

I'm glad that you're satisfied with your bond funds. I'm definitely happy with my MYGAs. To each his own.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by Sandi_k »

Elsebet wrote: Tue Aug 10, 2021 10:17 am Enjoyed the podcast, thank you Rick and Lisa.

As a DINK (dual income no kids) couple without much close family left, I'd love to hear a podcast on what steps we can and should take to guard against elder fraud/abuse in the future.
Agree entirely. I talked to my 84 year old mother yesterday, and she has received concerning calls and emails that she is bamboozled by. Happily, my harping on "if they ask you for money at any point, it's likely a scam" was enough for her to hang up.

But she was all in when called by Officer Mike Wilson of the DEA, who informed her that a drug lord bought a 2004 Toyota Corolla in her name (IDENTITY THEFT!) and was impounded with 10 lbs of cocaine in it (drug arrest!). So she needed to cooperate in their sting operation to get the other malfeasants by withdrawing loads o' cash, and mailing it to the DEA's drop box. To assure her, he would SEND HER A PICTURE so she would know he was legit.

Gah.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by FoolStreet »

bradinsky wrote: Fri Aug 13, 2021 7:13 am
FoolStreet wrote: Fri Aug 13, 2021 12:13 am
bradinsky wrote: Wed Aug 11, 2021 7:08 am
Stinky wrote: Mon Aug 09, 2021 9:15 pm
FoolStreet wrote: Mon Aug 09, 2021 8:19 pm Although some here on Bogleheads ascribe MYGAs to stealing the cheese out of the mouse trap.
Huh? :confused
+ 1 to Stinky. Difficult to understand Fool’s comment!
MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap.
n
Some people enjoy going to the steak dinner to learn about 'risk management in retirement' but someone buys the insurance to pay for everyone's steak dinner. But for the average person who doesn't understand stocks/bonds and thinks they can trust the insurance salesperson who sells a product that is as safe as CDs but with thea upside of the stock market and guaranteed not to lose money.... they should beware.

So, I forego the MYGAs, and just find a simple bond index fund biggest downside that I can live with as part of my asset allocation. Keep it simple.
Fool,
I never was solicited & sold a MYGA by an insurance agent & FWIW I’m a very difficult person to sell anything to. I went out seeking something safe that would give DW & I a return that was greater than a CD & ended up with a 5 year, 3.05% MYGA. Actually, the process was very similar to purchasing a CD. Blueprint income was great. ZERO SALES PRESSURE. I would bet that many here would love to have it! It was offered by an A rated company & our state guarantee limit of $250K is slightly above the final value at 5 years out. You might be surprised if you actually made an effort to explore what’s offered at Blueprint, or Stan the Annuity Man, before judging. Worlds better than the paltry returns of the best CD’s currently available. In my view, the only significant downside is the lack of liquidity. If needed, we are only able to access 10% of the value each year. For us that is not an issue. At this point we have way too much cash earning very little.

Thanks again Stinky for your help/advice!!
Brad,

For the person who is financially astute and can sort out the bad ones from the good ones, and can find Blueprint or Stan, then more power to you! But let's not kid ourselves about the average folks. You and Stinky are not average..and neither are most Bogleheads. Most folks don't understand insurance products. On $250k, you earn an extra $3750 / year over just investing in BND. Cool. That's real money and a good way to prevent reaching for risk in fixed income. Good for you.

On the other hand, we have seen enough times people post on this board with crappy insurance products. I'm talking about them. Not you.
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by VanGar+Goyle »

adamthesmythe wrote: Sun Jul 25, 2021 6:25 pm
FoolStreet wrote: Sun Jul 25, 2021 5:27 pm
DanFFA wrote: Sat Jul 24, 2021 7:04 pm I found the warning to not invest in annuities at all to be very counter to some of the information I've seen posted on this and other investing forums for later in life.

Great coverage of a lot of situations people take for granted as 'that would never happen to me' and 'my family would never do that.'
You misquote Bogleheads. We never recommend annuities, except for SPIAs maybe.

...or MYGAs...

...but not those other kinds.
... or QLACS ...

...but not those other other kinds.

There are many kinds of Boglehead annuity recommendations. Many are good.
Well, you pay a little bit, we're a little bit tough. | You pay very much, very much tough. | You pay a too much, we're too much a tough. | How much you pay? ... Well, then we're plenty tough. - Marx
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by cheese_breath »

FoolStreet wrote: Fri Aug 13, 2021 12:13 am MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap....
So are you suggesting (s)he won't try to upsell you to a more expensive product when you want an SPIA?
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Re: Elder Abuse and Financial Fraud: latest Bogleheads on Investment podcast

Post by FoolStreet »

cheese_breath wrote: Sun Aug 15, 2021 8:30 am
FoolStreet wrote: Fri Aug 13, 2021 12:13 am MYGAs will provide a little better return than CDs, so that extra yield is the cheese. The trap is when the insurance salesperson upsells to a complicated whole life, variable annuity, etc. The salesperson is the trap....
So are you suggesting (s)he won't try to upsell you to a more expensive product when you want an SPIA?
Oh, I presume they will try. I think it is fair to just say buyer beware.
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