We’ve seen it so often on TV and in movies that it has almost become a cliché: the millennial who has graduated from college but is still living in his parents’ basement. We roll our eyes and tell ourselves that there’s no way we would ever let one of our kids sponge off us when they are perfectly capable of supporting themselves.

And yet, all too often, the above scenario comes home to roost. A colleague of mine told me of a client who requested a Monte Carlo simulation on his parents’ portfolio, under management at the same firm, “just to make sure that no matter what happens, Mom and Dad will be okay.” The planner obliged and reassured the concerned son that his parents had plenty of assets to assure a comfortable lifestyle for their probable lifespans.

But what my colleague didn’t know was that his client had a gambling problem. Armed with the knowledge that his parents had more than ample assets, he convinced them to combine their annual gift exclusion and start giving him $28,000 each year. He told them the money was going for things like a new roof for the house, a big remodel that his wife wanted, replacing a broken-down central heating and air conditioning system … You get the idea. He was actually blowing the money on gambling and coming back to his parents each year for another handout.

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By the time my client came to see me — $65,000 later — he had some deep misgivings about what was going on.

One of my own clients wanted to give his granddaughter money for college, and he could well afford to do so. During her freshman year Grandpa regularly took his darling to lunch, where she would give him the scoop on how great college life was.

The second year started off the same way, but over time, Grandpa noticed that the conversations were less frequent and informative. The summer between her sophomore and junior years, she asked for an extra $5,000 to cover the costs of a study-abroad program. The junior year started, and though Grandpa came through with the usual $20,000, the communication from his granddaughter dwindled down to practically nil.

By the time my client came to see me — $65,000 later — he had some deep misgivings about what was going on: well-founded, as it turned out. We learned she had flunked out by the end of her sophomore year and was using her grandfather’s money to support herself and the boyfriend she was now living with.

THE PROBLEM
These are not isolated cases. According to the Pew Research Center, in 2015, a record 33% of adults age 18 to 34 were living with their parents, despite improvement in employment statistics for the same age group. A previous study by the National Endowment for Financial Education indicated that 43% of US parents providing financial support for adult children say they are doing so because they are “legitimately concerned with their child’s financial well-being.”

That last statistic is important, because according to the National Center on Elder Abuse, “Perpetrators are most likely to be adult children or spouses … to have history of past or current substance abuse, to have mental or physical health problems … to be unemployed or have financial problems, and to be experiencing major stress.”

On the regulatory side, more states are enacting legislation to require advisers to take action — including halting the disbursement of funds from client accounts and giving advisers immunity from civil prosecution — in order to protect older clients.

In 2016, Alabama, Indiana, and Vermont enacted such laws, joining Missouri, Washington, and Delaware. A similar statute went into effect in Louisiana, January 1, 2017.

The Solution
The most important thing, of course, is the mantra basic to all financial advising: Know your client. Be familiar with your client’s situation, holdings, concerns, capabilities and goals for the future. The more we understand our clients and what they want to achieve, the better we can help them avoid pitfalls—including financial manipulation by family members.

As a financial adviser, I try to help my clients set boundaries, create accountability, and simply learn to say “no” to those who are using the powerful bond of family as leverage for financial abuse. I encourage them to consider five key questions:

1. Do you ever feel manipulated by this person but ignore your feelings?
2. Do you think you may be supporting someone simply because they are lazy?
3. Are you providing regular assistance to an able adult?
4. Are you convinced that he/she cannot handle life without “falling apart”?
5. Are you excusing someone’s behavior due to economic problems, stress, or inability to find the “right” job?

If my clients answer “yes” to any of these questions, I advise them to do three things:

1. Stop enabling and start empowering. We’ve all heard the adage: “Give a person a fish and you feed her for a day; teach her to fish and you feed her for a lifetime.” I try to help my clients see that giving repeated handouts to those who are old enough to take care of themselves (giving them a fish) only enables destructive behavior. On the other hand, encouraging — or demanding — that they start taking care of their responsibilities (teaching them to fish) is empowering. In the case of the grandfather above, I helped him set expectations with his younger grandchildren that certain goals and requirements had to be met before any college money changed hands. We also began making payments directly to the institution — college registrar, apartment manager, etc. — rather than giving the kids cash upfront, with no accountability. The key here is that real need creates real motivation, and accountability should not be too much to ask.

2. Stop helping those who won’t help themselves. Let’s face it; actions speak louder than words. If all your client hears from someone are excuses about why they can’t succeed without a handout, you should advise your client to start suspecting a lack of motivation. If they don’t have enough personal responsibility to figure things out for themselves, you need to help your client see that they aren’t doing them any long-term favors by opening their wallet.

3. Get some outside help and support. Help your clients understand that they don’t have to go it alone and that often a more impartial adviser can see things they can’t. If they feel guilty telling someone “no,” offer to say it for them. Sometimes, the only way habitual dependents will ever learn to stand on their own two feet is if someone cares enough to say, “no more.” You can help your clients offer the tough love their family member may need.

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Kimberly Foss

Kimberly Foss

Kimberly Foss, CFP, CPWA, is a Financial Planning columnist and founder of Empyrion Wealth Management in California and New York. She’s also the New York Times best-selling author of Wealth by Design. Follow her on Twitter at @KimberlyFossCFP.