A financial blow
Seniors collectively lose at least $ 2.9 billion a year through financial abuse, according to a 2021 Bank of America report. This number is only expected to increase as the US population ages, with the number of people aged 65 and over expected to increase from 56 million in 2020 to 94.7 million in 2060.
“They call the exploitation of the elderly the crime of the 21st century,” said Paul Greenwood, a former assistant district attorney for San Diego County, Calif., Who specializes in elder fraud. “And in many ways that’s true, just because of the demographics.”
For an elderly person who has worked hard to save their entire life, such a crime can be devastating. The average amount lost by a senior in a reported case of EFE is $ 34,200, according to the CFPB study. In cases involving trustees, the average loss is $ 83,600.
Trustees who engage in these crimes carefully choose their victims, says Greenwood, who has been involved in prosecuting more than 750 elder and dependent adult abuse cases, many of which had a financial component.
âThey know the customer’s lifestyle,â he says. âThey know their client’s cognitive impairments. They also know whether or not that client has family members who are close or keep in regular contact. “
The financial skills of many older people decline with age, making them even more vulnerable to an unscrupulous financial professional, says Surya Kolluri, managing director of the retirement and personal wealth unit at Bank of America.
Financial sector supervision
The vast majority of financial professionals don’t steal from their clients and work hard in the best interests of those clients. In fact, they are an important line of defense against financial abuse.
Federal banking secrecy law requires financial institutions to file a Suspicious Activity Report (SAR) with the Treasury Department’s Financial Crimes Enforcement Network if they detect suspicious activity on a customer’s account. The CFPB also advises institutions to report cases to local, state or federal authorities.
The Financial Industry Regulatory Authority (FINRA), an industry group authorized by Congress to protect the interests of investors, also has regulations that can help detect EFE. For example, FINRA rules require member institutions to search for the name of a âtrusted contactâ for anyone opening a new account.
That way, if the institution detects suspicious activity regarding the account or if a financial advisor has concerns about the cognitive abilities of the account holder, âI have permission to go and contactâ the designated person, Kolluri says.
What families can do
Experts recommend “family members and friends take these steps to minimize the risk that a vulnerable loved one will be taken advantage of by professionals to whom they have entrusted their finances.”
Be on the lookout for red flags
Ask questions if a financial advisor frequently moves a loved one’s money or recommends major changes to their assets or estate, says Adam P. Scherer, president of Greenbeat Financial, a financial planning firm in West Hartford, Connecticut .
A lack of availability and accessibility – not returning phone calls, for example – is another important warning sign, Scherer says, indicating at the very least negligence on the part of the finance professional.
Alert banks to life changes
Let a loved one’s bank or credit union know about changes in the lifestyle or money management of an aging loved one, such as a new caregiver, custodian or professional trustee, or about ‘moving to a long-term care facility, advises Greenwood.
Ask the institution, in writing, “to keep an eye on my mother’s account or my father’s account, and if you see any change in any kind of behavior, I want you to report it immediately and do your duty. and report it to Adult Protective Services, âhe says.
Keep in touch with service providers
Whether it’s a caregiver, financial advisor, or professional trustee, let them know that family plays an active role in the client’s life, says Greenwood. Ask questions such as, âWhat are you going to do for my parents? And “How often will you be billing?” ”
If it’s convenient, go to their office “out of the blue, just to make sure things are going well,” he recommends. If you don’t live in the area, ask a trusted friend to do so.
Get a second opinion
This option can be expensive, but if you feel like something is wrong with the way a loved one’s trustee handles their finances, “ask your own lawyer or accountant, ‘Hey, those numbers got- do they make sense? âSays Patrick M. Simasko, an elderly law attorney in Mount Clemens, Michigan.
If you think your loved one has been a victim, call or write a letter to adult protection services in your area and notify local law enforcement.
The key to stopping EFE is awareness, says Greenwood: âWhat I’ve learned over the years is that we need to continue to spread this message in all its forms. “
Tamara E. Holmes is a writer and editor based in Washington, DC. She has written extensively on money, entrepreneurship and careers for over two decades. His work has been published in publications such as United States today, Working mother and Gasoline.