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October 16, 2013 at 07:00 AM
Nearly all of us have heard a version of this story.
A stranger contacts an elderly friend or loved one by phone or a knock on the door and asks them to make a significant financial decision, offering fraudulent assurances that the senior will either make more money or receive some other benefit by taking action. Or more commonly, a family member manipulates the senior into moving money or taking risks that serve only to benefit the family member.
Sadly, some older adults are vulnerable to this type of financial exploitation. For the fortunate ones, an intervention by a trusted family member may stop a bad situation before it is too late. But all too often, the trusting senior falls victim to the growing problem of elder financial abuse.
As baby boomers age and the senior segment grows, the potential for elder financial abuse is increasing. The nonprofit Elder Financial Protection Network says that at least one in 10 elders is exploited. That alarming statistic may be understated as some seniors are too embarrassed to admit that they have been victimized.
We in the financial services industry have an important role to play in combatting elder financial abuse. The first step is for all financial professionals to become educated on the topic.
It is clear that some financial firms are already attuned to the issue by offering training to agents to help identify potential diminished capacity or financial abuse. They also act as a resource to address difficult situations.
According to the AARP Public Policy Institute, financial capacity is one of the first abilities to decline as cognitive impairment develops. Yet seniors and their families may be unaware of this decline. That is why financial professionals need to have a basic understanding of this issue and be cognizant of the warning signs. These signs can include, but are not limited to, a lack of understanding of personal goals, product choices or simple instructions; a lack of core financial skills; clear signs of memory loss; and changes in personality or physical appearance.
