Over 70% of the nation’s wealth belongs to people over the age of 50. And, I’m not calling 50 old or elderly . . . This statistic is just to drive home the point that people over the age of 50 have more assets to target by anyone who wishes to take advantage. Let’s say you’re over 65 and starting to enjoy your senior citizen discount. I’m talking about you and everyone older than you. You are at risk of elder financial abuse. Anyone can be vulnerable.
Most advisors take classes to learn about elder financial abuse and how to spot it with clients. We learn how to identify transactions in accounts and behaviors of the people around our clients in order to prevent or put a stop to elder financial abuse.
Who would take financial advantage of an elderly person? You’d be surprised. I’ve run across instances of adult children taking full advantage of my elderly clients. The perpetrators can be family, neighbors, friends, church leaders, attorneys, banks, home repair businesses, cyber criminals, and others . . . including financial advisors. Over 90% of elder financial abuse is perpetrated by a person the victim trusts.
Legislation has been passed over the years to provide resources to protect elderly people. However, enforcement and stricter penalties remain a problem.
As we and our loved ones age we suffer from cognitive decline. Elderly people recognize their own cognitive decline, and have a tendency to withdraw, isolate and even become very secretive, as they doubt their own ability to discern who around them can be trusted. In the absence of family involvement, elderly people can become victims of investment fraud, deceptive business practices, cyber crime . . . And the reverse is also true. In the absence of professional advisor involvement, elderly people can become victims of abuses at the hands of their loved ones, neighbors, and even trusted religious leaders. So, as elderly people recognize their own cognitive decline, isolation can make them more vulnerable to the few people they still trust.
It’s never too early to have conversations as a family so that everyone is on the same page. Assigning different tasks and jobs to trusted loved ones and involving them in discussions with advisors can prevent risk of elder financial abuse from both sides. When everyone is sitting at the same table, having the same discussions, it’s difficult for anyone to take advantage of our aging loved ones.
Respire Wealth Management offers a program called “The Family Roundtable.” In the first meeting, the clients attend a one hour session and outline goals for themselves and their family members, and we work together to create a game plan for discussion at the bigger group meeting. Then, the office coordinates with family members who are expected to attend to set a date and time for a second discussion, which usually lasts one to two hours. Other trusted advisors such as the family attorney or CPA can attend the second discussion as well. The Family Roundtable helps to engage each member of the family and explain the financial concerns or hardships that the client may have. It puts family members’ minds at ease as issues such as long term care planning, investments, maintenance of the home, and even more sensitive issues such as the presence of living wills and funeral plans can be discussed. The meeting can also function to get the next generation(s) on the same page financially as the elder client. These sessions can be booked on the website or by calling or emailing the office.
How can you spot elder financial abuse? What are the signs?
- A decline in lifestyle that seems to appear out of nowhere
- Unpaid bills or letters from collections agencies
- Significant withdrawals from accounts
- “Hovering” or someone who does not let the elder person speak for himself or herself when discussing finances
- Missing items and/or cash from the home
- Your loved one seems to suddenly be afraid of or dislike someone
- A lot of new subscriptions or automatic draft payments coming out of his or her account
Everyone knows our parents and grandparents LOVE to give us things, and there’s always someone who may legitimately feel very protective and want to speak on his or her behalf. However, we can get an uneasy sense and be vigilant about what’s going on around our loved ones to ensure their safety. It can be a good idea to speak up and ask a few questions.
Elder financial abuse can take a heavy emotional toll on the victims. They become ashamed and are not likely to discuss mistakes once they make them. They may feel betrayed if they thought they were providing financial assistance out of love. They can become depressed or angry.
The types of abuse to watch for include:
- Deceptive business practices (for example, by people conducting home repairs or providing services in and around the home)
- Money scams and theft (by friends, family and churches)
- Cyber scams and identity theft
- Investment and insurance scams (such as pyramid schemes or lack of suitability of investments or insurance such as annuities)
- Medical scams (such as excessive billing or treatment)
- And more . . .
What can an elderly person do to protect him or herself?
- If something doesn’t feel right say “no,” even if it’s to someone you love
- Always obtain more than one quote for home repairs and check for reviews online or have a family member help you check for reviews, and use reputable companies, not just the cheapest one
- Never fill out information or log in to any website from a link in an email. If you get a notification that you need to login, close the email and go directly to the website on the internet instead or call the bank or organization that sent the email
- TALK to your family. Be open and honest with at least a few family members about what’s happening around you all the time. You want as many eyes on as possible. Don’t be ashamed if you think you were victimized.
- Plan everything. Have checklists and know where everything is.
- Ignore sweepstakes offers
- If your bank calls you, they will never ask for your account number or social security number for verification. When in doubt, tell them you will call them back, and call the bank at the listed phone number in the phone book or on their website. Then you can verify your account information over the phone.
Additional Resources:
Consumer Financial Protection Bureau Resources for Older Adults https://www.consumerfinance.gov/practitioner-resources/resources-for-older-adults/
Federal Trade Commission’s Consumer Page https://www.consumer.ftc.gov/
Tips on Spotting Elder Financial Abuse https://www.consumerfinance.gov/ask-cfpb/how-can-i-tell-if-a-friend-neighbor-or-family-member-is-a-victim-of-financial-exploitation-en-1933/
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