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Scams, theft and fraud with seniors' money is a growing problem. But the new Senior Safe Act helps advisors prevent this ugly abuse of their older clients.
The Wall Street Journal reports that banks calculated a 12% increase in financial elder abuse just in the last year. Why do the thieves pick on grandma or grandpa so much?
Your aging clients, whether getting advice or investing with you, are targets. They hold a disproportionate amount of our country's wealth.
You can help stop them from being victimized.
Over $36 billion a year is stolen from elders in the U.S. The problem isn't getting any better. According to the WSJ, it's getting worse.
Your aging parents are easy targets for scammers for lots of reasons. Elders in this country hold a disproportionately high level of wealth compared to younger people. Some have accumulated significant assets and they may not see themselves as vulnerable at all.
Clearly, diminishing cognition makes it easy for thieves and manipulators. Cognitive decline affects at least a third of people over age 85. Your aging client may not have the awareness any longer to spot a fishy-sounding line from a seemingly trustworthy source. Widowed clients live alone and are isolated, ready to engage with that friendly sounding, cheerful voice from the clever scammer on the phone.
Thieves stay in contact with your older clients when they find them and weave a trap over time. Many aging folks are dependent on others for care, help at home and social contact. Dependency makes them vulnerable. Unscrupulous family members lead the pack of those who seize on that vulnerability and trust to rip off their elders. It's all too easy to influence a trusting aging person to give a "loan," access to an account or power of attorney to a person with ulterior motives, which essentially creates a license to steal. Eventually they all want your elderly client to give them money. That's where your awareness can stop the abuser.
Banks are making efforts step up their reporting of suspected elder abuse, but that is not enough to thwart the crime. The Senior Safe Act gives you, the financial professional, protection if you report suspected financial abuse as long as you are trained to see it.
Great.
But how about stepping up your contact and review of transactions with any elderly client before abuse happens? Too often, the customer-facing bank employee does not see anything wrong until far too much money has been drained from the elder's account. After the abuse has occurred, it is too late to get the money back. And there is hesitation at the banks, even when they are warned. To put bluntly, banks can add to the problem.
One example of this involved a client of mine at AgingParents.com, where I consult with families and elders. She was the daughter of an 87-year old dad who had some memory problems and was frail and losing independence. Her father was a wealthy man, in a long-term relationship with a younger woman. The girlfriend had manipulated him into giving her access to his family's trust account into which his significant income was deposited each month.
The man's daughter found out after a suspicious withdrawal from the account and she contacted the bank immediately. She traveled to her father's state, went to the bank in person and showed them the trust, which did not have the girlfriend's name on it anywhere. She asked them to stop the access by the girlfriend. The bank complied and put the funds into an account to which the girlfriend did not have access. After the man's daughter left the state, the girlfriend took the elder back to the bank and told him to say that he wanted her on the account. Presto! The bank complied and the girlfriend then had access once again, only one day later. The bank aided the girlfriend in financial abuse of their own elderly customer, despite a specific request to stop it and evidence of manipulation by the daughter with power of attorney.
The matter ended up in litigation. We can only say "how ridiculous!" The bank employee or manager should have known better. The picture was classic: warning had been given, paperwork proving the problem was given to the bank, and the bank agreed to take the pushy girlfriend off the account. Then they turned around the next day and did the opposite, just because the elderly customer was standing there. Never mind that he was manipulated into saying what the woman told him to say, prodding him as he stood there. That kind of scenario, dumbly following an elderly person's questionable request, is what needs to change.
Now that you are supposed to report abuse, you need to know what the red flags of diminished capacity look like and how to see the warning signs of financial abuse. Get your free checklist of the red flags of diminished capacity here.
At AgingInvestor.com, we also offer accredited courses to train financial service employees, compliance officers and managers in how to spot warning signs of cognitive decline and financial elder abuse.
Do you need training? Now there is a quick and cost effective way to get it from experts who understand these age-related issues best.
Here are some takeaways:
- The Senior Safe Act gives you some immunity if you report abuse. It offers you no guidance in how to spot elder financial abuse.
- Aging clients with diminished capacity are, of course, much more vulnerable to manipulation by an unscrupulous romantic "friend", family member or stranger on the phone or internet. They need your watchful eye. Some financial abuse is preventable.
- Odds are that by the time you report suspected abuse, the money is already gone and authorities cannot get it back. It makes more sense to be proactive in protecting aging clients rather than merely reporting abuse. Learn about how to do that by increasing your knowledge base.
I encourage every financial professional to demonstrate their caring for their clients, keeping their best interests in mind and serving them for life by taking some new steps as your clients age.
Carolyn Rosenblatt, RN, is an elder law attorney. More information about her and her services can be found at AgingInvestor.com.
Read more articles by Carolyn Rosenblatt
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
