A report this year by Allianz Life, sheds a sad light on elder abuse. But, the research also provides an opportunity for advisors to open the conversation with clients about the harm that could befall them, even at the hands of loved ones.
In a conversation with Allianz Life President and CEO Walter White, he said that advisors can be (and should be) part of the solution. “They can look for red flags (when studying a client’s financials.) They can make sense of unexplained issues and be stewards for the clients.”
The study of more than 2,000 Americans — both potential victims (ages 65-plus) and other adults (ages 40 to 64) — finds that misconceptions persist about the most likely sources of abuse. And the financial impact on victims, though underreported, is often significant.
“Although past studies have explored elder financial abuse, it’s crucial to get a current picture to help determine how the financial services industry can best address this difficult yet preventable problem,” said White. “As America’s population gets older, the number of seniors with age-related cognitive impairments naturally is expected to grow.
“Greater awareness about the frequency of elder financial abuse will foster more discussion about ways to keep our seniors safe from financial exploitation,” he added.
The report added that several factors — aging, wealth and decreasing mental capacity — contribute to making the elderly vulnerable to financial abuse.
The U.S. Census Bureau projects that more than 20 percent of the total population will be age 65 or older by 2030. Among this group, many will likely hold considerable wealth. Baby boomers control more than $16 trillion in household investable assets, according to a LIMRA 2011 report.
The following numbers a worksheet that advisors can use with their clients and prospects to help educate them on the widespread problems of elder abuse.
- 5 percent of elders (respondents aged 65+) in the Allianz Life study reported that they suffered financial abuse.
- 19 percent of 40-64 year old respondents (family/friends) reported they were aware of an older friend or family member who has been a victim.
- Our study was consistent with the national average – the AARP estimates that only 4 percent of abuse cases are ever reportedi.
Substantial Financial Loss
- Most common results reported by surveyed elder financial abuse victims :
- 33 percent had funds disappear from accounts
- 23 percent had unauthorized purchase of product or service
- $30,000 average loss
- 12 percent report suffering losses of $100,000 or more
Abuse Often Begins with Friends, Family
- According to victims in the Allianz Life study, 52 percent of the elder financial abuse (EFA) originated by a family member, friend or caregiver.
- Study confirms findings that show nationally, 90 percent of cases of EFA come from people familiar with the victimii according to the National Adult Protective Services Association.
Inconsistency with recognizing, reporting and preventing EFA
- 78 percent of family/friends feel confident that they could recognize EFA if it happened to a family member or friend.
- Elders are more confident they can recognize EFA even though very few report it, 89 percent feel confident that they could recognize EFA if it happened to them.
- 58 percent of family/friends think they have the resources and information they need to help prevent EFA and 29 percent are “not sure” (compared to only 15 percent of elders who said they weren’t sure).
- 82 percent of Elders feel they have the resources needed to prevent themselves from become an EFA victim, which is much higher than their family/friends.
- 56 percent of family/friends report that someone is helping an elder victim with their finances but in reality, only 35 percent of actual victims report that someone is helping them with their finances.
About the study:
*2,000 Americans in two cohorts were surveyed: potential victims of elder abuse (those age 65+) and friends/family of potential victims (those age 40-64). Conducted by IPSOS, online during March 11-21, 2014. Find out more at www.allianzlife.com/sos.
i AARP Bulletin, March 2013 – “A New Watchdog is Guarding Your Money”
ii National Adult Protective Services Association, June 2012 – Elder Financial Exploitation