Barbservations From a Free Dinner Seminar

Not a week goes by that I don’t receive colorful tri-fold invitations to free meal seminars for investments and preplanned burials and cremations. Sometimes as many as five a week. Living in a 55+ community in a state (Florida) with many older adults undoubtedly makes me a target. 

Recently, some neighbors and I decided to attend an investment seminar, primarily to see the venue, which is a high-end private golf club in a gated community that is not generally open to the public. I also figured that I would get some useful content for a blog post in addition to the free meal.

Below are five “Barbservations” about the seminar format, content, and take-aways:

You Will Get Hungry- I typically eat dinner around 6:30 pm, which is when the presentation was slated to start. Actually, it was more like 6:45 pm. The meal did not get served until 7:45 pm. Luckily, I expected this might happen and brought a granola bar to tide me over when my stomach started to growl loudly. I couldn’t help wondering if everyone else was getting very hungry also. I saw a few people looking at their watches.

Content Did Not Match the Invitation- Ten topics were listed in the seminar invitation. Only a few were actually addressed in the presentation, which included the presenter’s life story, topics not listed on the invitation, and a variety of “industry-speak” phrases (e.g., “duly licensed”). There were, however, several very instructive stories (e.g., a client who never changed a beneficiary designation from his deceased father to his wife, had no contingent beneficiary, and the asset took 13 months to go through probate, thereby delaying much needed income to the spouse).

Changes in Guaranteed Income- This is an important topic for retired married couples, who comprised the bulk of the audience. A story was shared about a couple that had $6,000 in income and only $2,000 when the wife was widowed and lost all pension benefits and was left with only one Social Security check. I’m not sure why this was so. Fear mongering? Under the 1984 Retirement Equity Act, workers cannot waive survivor benefits without the written consent of their spouses. There should not be any unexpected surprises. Take-away: a good question for spouses to ask each other is “If you die first, how much money will I receive?”

Fees Erode Wealth Accumulation- The presenter asked for a show of hands to answer questions about attendees’ knowledge of prices for consumer purchases (e.g., food and gas). He then went on to make the point that, unlike food and gas prices, many investors do not know what they pay in fees for investments and investment advisory services. Point well taken. If someone pays 2% of a $100,000 portfolio in fund + advisor fees, that is $2,000 a year and $20,000 in ten years!

Payable on Death Designations- The presenter rightly noted that Payable on Death (PoD) designations on bank accounts (as well as Transfer on Death (ToD) on investments) are a form of estate planning so non-retirement account assets can pass free of probate. Like beneficiaries, PoD and ToD designations must be kept updated. An excellent piece of advice was to keep adding PoDs to new CDs that rollover from previous CDs because they are a new contract.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

When There’s a Will, There’s a Way

 

The phrase “when there’s a will, there’s a way” is generally used to describe a personal trait that some people call “willpower” or “grit.” People with grit have a strong determination to do something, often against great odds. They keep on going and “push through” against obstacles big and small and, in the case of personal finance, temptations to spend money.

 

“When there’s a will, there’s a way” also makes a great title for a post about wills. Below are five important things to know about preparing a will and what happens when people lack one:

Purpose of a Will- A will is a written document that sets forth directions for the disposition of property when someone dies. This includes the naming of a personal representative (executor) to manage the estate distribution process and a guardian to provide care for minor children. The laws of each state specify requirements for a legal will (e.g., number of witnesses and notarization and who qualifies to serve as an executor). For example, in Florida, executors must be a state resident over age 18 or a blood (or adopted) relative. A friend living in New Jersey would not qualify.

 

Dying Without a Will- When people die without a will, state intestacy laws determine to whom their assets pass and when they pass. Without a will, an estate can be tied up in probate court, possibly for years, and there will likely be higher estate administrative costs (e.g., bonding for an appointed personal representative). Probate is the court-supervised process of gathering data about a deceased person’s assets, paying off creditors, and distributing assets to named beneficiaries.

 

Ambulatory Document- A will is ambulatory, i.e., it can be changed throughout the creator’s lifetime. It only becomes final when the creator dies. There are three essential sections: who the creator is, what assets the creator has, and who the creator’s assets will go to (e.g., family, friends, charity). Even if not required by state law, wills should be notarized so they are “self-proving” and heirs don’t have to scramble to locate the witnesses, often decades after a will is signed.

 

Excluded Assets- A will does not distribute assets that have named beneficiaries. This includes beneficiary designations on life insurance policies, annuities, and retirement savings accounts such as 401(k)s and IRAs as well as payable on death (PoD) designations on bank accounts, transfer on death (ToD) designations on investments, and assets with a joint tenancy with right of survivorship (JTWROS) title. When a will and title conflict, the title to an asset takes precedence.

 

Personal Representative- A named personal representative (i.e., an executor in a will) can be an individual (e.g., family member or friend) or legal or financial services industry fiduciary (e.g., attorney or bank trust department), if qualified under state law. When there is no will, or a named executor is unwilling or unable to serve, a known or unknown (to the deceased) personal representative will be named. As noted above, this can increase the cost and time frame for estate settlement. An upside, however, is that there may be greater court supervision. This can be a plus for people who have “nobody left” or nobody they can trust to manage their assets.

Beware of Frauds and Scams

 

Not a week goes by, it seems, when we don’t hear about the hacking of a large third party data base that stores our personal information for its clients (e.g., hospitals and employers) without our knowledge or consent. This makes us vulnerable to online scams and fraud in general.

 

Below are important things to know to avoid becoming a fraud victim:

¨    Nobody is Immune- Scams can happen to anybody regardless of age, income, educational level, etc. That said, older adults are often targeted because they have more wealth and are generally less tech savvy than younger generations. For example, the 352 area code in central Florida is a prime target because it includes a large older adult community called The Villages.

 

¨    Decision Rules are Helpful- Here are three examples. 1. Do not answer the phone if you do not know who is calling. Let it go to voice mail and block the number. 2. If someone cold calls to “verify your identity,” hang up. 3. Don’t “sit on it” if you think you were defrauded. Act immediately to report a scam by calling your bank, credit card company, and/or local police department’s non-emergency number. In other words, get help immediately!

 

¨    Common Fraud “Red Flags”- Here are three examples. 1. Banks, the IRS, Social Security, and Medicare will not call you to “verify information.” 2. If there is actually a warrant for your arrest, authorities will come to get you; they will not ask you for information or money. 3. Requests to pay fees for prizes or to “fix’ fake crimes are common giveaways, as are requests to send money using Bitcoin ATMs, prepaid debit cards, and the numbers on gift cards.

 

¨   Grandchild Scam Methods- A victim gets a call claiming to be from a grandchild in trouble. Perhaps a realistic snippet of their grandchild’s voice is harvested from social media or created using artificial intelligence (AI). A red flag for a grandparent scam is the fake “grandchild” saying something like “I’m badly injured….please talk to this person [fraudster].” The best protection is checking it out. If you are a grandparent, call your grandchildren or their parents.

 

¨   “Love” Can Hurt (Financially)- Romance scams often go on for months so fraudsters “build a bond” before asking victims for money. They often begin on social media and dating apps where fraudsters tell victims they want to get to know them. Connections are also made via  online games such a poker and “Words With Friends.” After a while, they will try to speak to victims on the phone and may send a fake photo. There may even be talk of a future wedding. Fraudsters then ask for money with an excuse such as medical bills or paying for a plane ticket. Experts advise ceasing all communication and never sending money to people you meet online.

 

¨   Fake Shopping Deals- This is where fraudsters pretend to be a legitimate business (e.g., Walmart, Talbots) and bait people with extremely low prices, often with fake ads on social media. They then take victims’ personal information and money but never send ordered items. The best way to avoid this scam is to only click on online shopping links that you search for.

    This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

AFCPE 2024: Ten Take-Aways and a Barbservation

I recently returned home from the 2024 Symposium of my professional “home,” the Association for Financial Counseling and Planning Education® or AFCPE®. This conference serves an amazing mix of researchers, practitioners, and educators whose work positively impacts the financial wellness of U.S. families. 

Below are my key take-aways from #AFCPE2024 and a Barbservation:

 

Motivational Techniques- These approaches can be used for positive changes or for fraud. Reciprocity is where you get something (e.g., a free meal) and feel pressure to return the favor. Social proof is when you are told about others who have done something that you are being asked to do. In addition, people who agree to small things are often asked to agree to something bigger. Fraudsters keep getting better at developing strategies that nudge consumers to part with their money.

 

Student Loans- The Saving on Valuable Education (SAVE) program that replaced a program called REPAYE is frozen with no new enrollments as a result of a court injunction. Borrowers were placed in an interest-free forbearance. Lawsuits were brought against SAVE because it costs a lot of money to forgive debt and this was not approved by Congress. Public Service Loan Forgiveness (PSLF) was approved by Congress but could always be undone in the future.

 

Fraud and Scams- Classic strategies (e.g., “pump and dump”) are being used with modern technologies to reach victims with pitches that prey on emotions (e.g., greed, fear, and fear of missing out or FOMO). Scarcity (“this product is only open to the first 100 investors”) is another common ploy. Everyone, regardless of education, can be a fraud victim during a moment of vulnerability.

 

High-Income Households- AFCPE members were advised not to ignore this demographic as more than half of Americans earning $100,000+ a year live paycheck-to-paycheck. Financial challenges of high-income households include lifestyle inflation, social pressure, family and community obligations, over-leveraging debt, and complex financial planning needs.

 

Gig Workers- This term includes freelancers and self-employed individuals. There are about 63 million U.S. gig workers in 2024 or 38% of the total workforce. One in five makes six figures. Gig workers should avoid comingling personal and business expenses, set aside money for taxes, and track jobs that provide 1099 forms for income reporting so they know if they are missing any 1099s at tax time. Hallmarks of a maturing business include registration with a state Secretary of State, a business bank account, good credit, 3-6 months of bank statements, and a business plan.

 

Financial Abuse- Abusive relationships often develop gradually and the key driver is control.  Indicators of economic abuse include: threatening harm, controlling or sabotaging a victim’s work, and limiting a victim’s future career growth (e.g., taking classes). The reason that people stay in abusive relationships is often similar to those who don’t heed warnings to evacuate during storms: they don’t know where to go and/or lack the ability to move pets and possessions.

Artificial Intelligence (AI)- The better an AI prompt, the more useful the output. Positive uses of AI in financial education include automated financial advisors, fraud detection, personalized financial products, and the creation of quizzes, discussion questions, rubrics, and templates. Negative aspects of AI include privacy invasion, biased decision-making, authoritative erroneous output called hallucinations, over-reliance on automation, and erosion of skills.

 

Veterans Benefits- VA benefits are all about Veterans- not their spouse or children. Debunked myths included “My VA disability benefit will continue for my spouse after my death,” “I will be able to go to a VA long-term facility,” and “I get free life insurance from the VA.” The VA will pay up to $2,000 toward burial expenses for a service-connected death and up to $978 for a non-service connected death. This is not automatic, however, and government paperwork is required.

 

Financial Well-Being- Becoming financially secure is hard and many people feel like they should be doing better. Shame is common as evidenced by a majority of engaged couples who do not disclose debt to each other. Achieving financial well-being is a behavioral problem, not a knowledge problem. Symposium attendees were advised to consider taking a periodic "financial health day” to focus on finances and to encourage their clients to do the same. 

 

Powerful Presentations- Presentations about personal finance (or any other topic) should have a strong opening with a statistic, quote, story, demonstration, or question. Likewise, the end of a presentation should be equally strong with a call to action. In other words, So What? Now What? How can audience members apply the presentation content to their life or work?

 

I close with a personal Barbservation.

 

In informal conversations with dozens of attendees and in some questions asked of speakers, there was a strong undercurrent of worry, anxiety, concern, and/or dread about the incoming administration and potential federal agency leadership appointees. The Symposium attracts a number of government employees (e.g., Securities and Exchange Commission (SEC), Consumer Financial Protection Bureau (CFPB), U.S. Department of Defense, U.S. Department of Agriculture, and U.S. Department of Veterans Affairs) as well as financial education entrepreneurs like me (full disclosure) who work on federally-funded projects.

 

Yes, people are worried about the potential loss of their government-funded jobs but equally as important, the loss of the valuable services that their agencies provide to ordinary Americans. Below are some examples.

 

Will billionaire cost cutters understand, or care about, the financial education and counseling services that Personal Financial Managers (PFMs) provide to service members on military installations worldwide? 

Or the valuable professional development training that OneOp provides for military service providers? 

Or the financial education delivered by Cooperative Extension educators who help individuals and families across the U.S. improve their financial well-being? 

Or the preventive financial education and regulatory enforcement programs provided by the SEC and CFPB that help combat fraud?  

I certainly do hope so, but recent news headlines have me feeling uneasy and apprehensive too.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

 

Scams, Schemes, & Fraud: Tips From Law Enforcement

 

I recently attended two separate programs about consumer fraud, The speakers included a county sheriff, non-profit agency representatives, and state attorney general’s office staff.

 

Below are take-aways from these presentations to help you avoid becoming a fraud victim:

Romance Scams- In 2022, nearly 70,000 people reported a romance scam and losses hit a shocking $1.3 billion to the Federal Trade Commission. Program speakers advised taking any new relationship- especially a virtual one- slow, asking lots of questions to get to know the other party, and looking for inconsistent answers and excuses for why not to meet in person.

 

Phone Scams- There are many varieties: “grandparent” scams requesting money for a grandchild in need, fake charities, pretexting calls purporting to come from a bank or government agency (e.g., the IRS), and fake lotteries and sweepstakes. One speaker advised the following: “Don’t answer phone calls with an unfamiliar number. Let it go to voice mail.”

 

Top Three Scams- The top scams being reported to authorities include 1. AI powered scams (e.g., the use of just 5 seconds of someone’s voice for use in scams such as grandparent scams), 2. Funeral scams (pretexting a funeral home and contacting bereaved families to request money for services), and 3. Tech scams (via pop up messages on a computer with malware links or phone calls claiming to come from companies such as Apple, Google, and Microsoft).

 

Card Skimming- Skimming devices illegally installed on gas pumps or ATMs are used to collect information from the magnetic strip on credit and debit cards to commit crimes. Tips to protect yourself include making transactions inside, using machines closest to physical buildings, and looking for signs of tampering such as loose parts. At gas pumps, paying with cash, credit cards (zero liability policies), or “tap and go” is recommended. If you must use a debit card to pay, experts advise using the “credit card” option instead of entering a PIN.

 

Evergreen Fraud Advice- The following statements are true anywhere, anytime, for anyone:

¨   Legitimate lotteries do not collect credit card data and charge handling fees for prizes

¨   Do not send money to “cold callers” (phone, e-mail, etc.) who you do not know

¨   Do not purchase gift cards or wire money for payments. Instead, Stop. Think. Go Home

¨   If you suspect possible fraud, say something; the worst that can happen is you are wrong

¨   Real technology companies do not contact people out of the blue to request money

¨   If something sounds fishy, walk away, hang up, or delete. Don’t engage with fraudsters.

¨   Monitor bank and credit card statements regularly to quickly identify suspicious activity

¨   Taxpayers can get a PIN (from the IRS) to reduce the risk of being defrauded on their taxes

¨   Vigilance, caution, and time (don’t be rushed into decisions!) are key protective factors

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.