One in 10 older Americans experience abuse, and financial abuse is one of the most common forms. According to the National Council on Aging, up to 5 million Americans suffer from financial elder abuse every year, with financial losses of at least $36.5 billion per year.
Though some of these abuses are the work of scammers, they often happen at the hands of trusted family members, friends and caregivers who take advantage of an elder’s cognitive decline or other health issues for their own financial gain. This can involve getting elders to sign checks and forms they wouldn’t sign otherwise, among other abuses.
Financial elder abuse is pervasive, and advisors responsible for the financial well-being of elderly clients are in a position to help stop it. Here are some best practices that can help mitigate such abuses as well as five steps to take to prevent them:
— Recognizing signs of financial elder abuse.
— Reporting suspected financial elder abuse.
— Preventing financial elder abuse.
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Recognizing Signs of Financial Elder Abuse
When a financial advisor suspects that financial abuse has occurred, there are some ways to confirm it. Identifying an abuse after it has happened may seem like trying to scoop up spilled milk, but early identification can both prevent further losses and help recover what was already taken.
Signs that financial elder abuse is taking place (or has taken place) include:
— Unpaid bills.
— Unusual or unexpected changes in the spending patterns of elders.
— Fraudulent signatures on various forms.
— Elders acting stressed about their money.
— Unexpected transfers of assets or money.
Any of the above is a red flag, and when an advisor discovers a discrepancy, proper checks into the accounts of the elder should be conducted to unearth any abuse. Of course, red flags also mean financial advisors must be extra vigilant and establish guardrails that will alert them to potential or ongoing abuse.
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Reporting Suspected Financial Elder Abuse
Even when financial elder abuse has already taken place, advisors can counsel elders to report the case to the police and any other relevant authority. By some estimates, only 1 in 24 cases of financial elder abuse gets reported. Financial advisors should encourage victims to report abuses so the losses can be recovered and further abuses can be avoided.
Furthermore, financial advisors don’t need to wait for the crime to happen before they report it. Suspicions of financial abuse can be reported even if they have not yet been confirmed. It is then the responsibility of relevant authorities to act on the report.
Preventing Financial Elder Abuse
An ounce of prevention is worth a pound of cure when it comes to financial elder abuse. Therefore, advisors should also put processes in place that will prevent financial elder abuse:
Cybersecurity Solutions
Products such as Norton’s LifeLock, Identity Guard and ID Watchdog, among other cybersecurity solutions, can help prevent identity theft, privacy and data breaches, and other threats.
Carefull is a software that helps caregivers protect and organize the finances of elders. The app provides identity protection, password management, smart account monitoring and credit monitoring, among other features.
Financial advisors can recommend that elders and their caregivers purchase such solutions and use them to prevent cyberattacks from scammers, whether they are distant criminals or close relatives.
Automated Bill Payment
Automating bill payment is another way to help prevent financial elder abuse. If bills are automated, then the elder or their caregiver does not need to write checks or transfer money for them. The predictable schedule makes it easier to identify outlier, or fraudulent, payment requests.
Financial advisors should consider suggesting such apps to elders and their caregivers.
Silver Bills is one such app that handles bills on behalf of users and provides regular updates about bill payments. It includes various cybersecurity features, such as two-factor authentication and a network of firewalls and encryption algorithms. More important, an artificial-intelligence-supported algorithm, a human auditor and a dedicated account manager will review any bill payment.
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Power of Attorney
It is also prudent to appoint a trusted person with a power of attorney to help the elder make important financial decisions
when they become incapable of making those decisions on their own.
The financial advisor should ensure that the person truly has the elder’s interests at heart. It is also preferable if the person is financially stable, which at least makes it less likely that they will use the elder’s finances to help themselves.
Since those close to the elder are often the primary sources of abuse, it is better if the power of attorney is devolved or decentralized. In this case, the various people with the power will serve as a check on one another.
Trusted Contacts
Financial institutions request that every account holder has a “trusted contact.” This is the person they can reach out to if the account holder is unavailable.
Though the trusted contact cannot make decisions on behalf of the account holder, they can at least be aware when something nefarious is going on with the account.
Financial advisors should help elders choose credible people as their trusted contacts.
Accountability for Financial Caregivers
A financial caregiver helps an elder manage their finances. Duties can include paying bills, making deposits, preparing tax forms and claiming benefits, among other tasks.
Even supposedly trusted people can be made accountable. Advisors should keep an eye on the financial caregiver to ensure that they are acting in the best interests of the elder.
Keeping their clients financially safe is an important responsibility of financial advisors, and it’s also in advisors’ best interest. Only money that has not been lost can be well invested and managed.
Advisors should consider implementing the suggestions above and looking into what else they can do to prevent financial elder abuse and quickly respond when it does happen.
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Financial Elder Abuse: How Advisors Can Help Protect Clients originally appeared on usnews.com
