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Who’s Ripping Off Your Aging Clients?

  • By Ironstone
  • |
  • July 14, 2015

elder abuse

Persons over the age of 50 control over 70% of the nation’s wealth, making them an attractive target for abuse.¹ Pinning down the extent of financial elder abuse is difficult and finding ways to minimize it are even harder.

The excess number of fraudulent solicitations, paired with the inability of elders to recognize the red flags of fraud, place a large number of older people at risk of losing money. A survey prepared for the FINRA Investor Education Foundation says, “8 out of 10 respondents were solicited to participate in a potentially fraudulent offer, and 11% of all respondents lost a significant amount of money after engaging with an offer.”

The FINRA survey goes on to say, “The inability of researchers and policy makers to obtain an accurate measure of financial fraud constrains our understanding of the problem.”

  • 11% of respondents lost money in likely fraudulent activity but only 4% admitted to being a victim of fraud when asked directly; representing an estimated under-reporting of over 60%.
  • The survey cites several reasons for under-reporting including: reporting would not have made a difference, not knowing where to file a report, and embarrassment.

Financial advisors have come to a crossroads as aging clients transfer their wealth to the next generation. It’s a critical time to put processes in place to retain assets and to be educated and able to recognize cognitive issues, elder abuse, and pursue FINRA’s recommendation to put senior-specific policies in place.

Financial elder abuse presents itself in many forms: family members, caregivers, and trusted professionals. The statistics are alarming. In this guest publication, Carolyn Rosenblatt, R.N., B.S.N., Attorney, and Mediator, lays out ways advisors can help.

Carolyn along with her husband, Dr. Mikol Davis, Ed.D, a licensed clinical psychologist specializing in geriatrics and the emotional challenges of aging, have joined Ironstone’s team of affiliates. Together they have conducted extensive research in the financial services industry and analyzed what regulators want financial service professionals to do about aging clients. Their efforts evolved into programs for industry professionals to develop senior-specific special policies along with extensive educational materials for financial services professionals to learn about aging, cognitive impairment, avoiding prosecution, and intergenerational wealth transfers.

Guest Publication by Carolyn Rosenblatt, RN, Attorney, Mediator

Most of us hear about unscrupulous family members taking advantage of their aging parents or grandparents. Everyone knows that internet scams abound. The one in which the scammer calls an elder and pretends to be a grandchild in trouble is notorious. Unfortunately, it is extremely successful and still continues today. Funds from grandma’s account get wired to Western Union and the thief disappears.

Financial elder abuse is rampant. The National Center on Elder Abuse puts the amount stolen from elders each year at $2.9B. A recent study by True Link Financial calculated the amount at a shocking $36B+ per year.  Who is doing this to our seniors?

Family members are the most frequent abusers of elders:  easy access, exploiting the relationship of trust, and knowing just how easily manipulated a parent or other loved one can become with aging and dementia.  Family members usually know how much money their parents have and how to get the parent to either give it to them or give them control over it so they can take it without the parent’s knowledge. Sadly, we see this often in our consulting work.

Caregivers, who also develop a relationship of trust with their care recipients, have the advantage of being with the elder in unsupervised situations.  Ruthless caregivers get the elder to sign a power of attorney. Being dependent on the caregiver, the elder may be fearful and intimidated if she does not acquiesce to their demands.  In one case, a caregiver managed to steal $4M from a 74-year-old client with multiple sclerosis who had become physically unable to manage the funds herself.  The caregiver got a power of attorney and opened 67 accounts in eleven banks. One bank finally caught on and reported their suspicions, but it was too late. The caregiver went to jail but the elder died before the criminal’s sentencing.

In spite of the easy access family and caregivers have to seniors, most dollars actually stolen from elders every year are by professionals. This includes broker-dealers, insurance salespersons, lawyers, and others in positions of trust and authority to manipulate or outright steal elders’ funds. About a third of FINRA prosecutions involve elders.  There are ripoff artists among us.

One thing that doesn’t seem to change over time is the reality that most cases of elder abuse go unreported to authorities and are therefore never prosecuted. The thieves just get away with it.  In one case we saw in our office, a 92-year-old whose son had power of attorney for her took thousands of dollars from her bank account and refused to take responsibility for his actions.  We were involved in helping her change his authority over her finances.  I spoke with her and described that what her son had done was wrong and was a crime. She knew it was wrong and did not want to take action.  Her response:  “I don’t want my son prosecuted.”

Many elders are more frail and less willing to pursue legal remedies than a younger person may be.  They suffer from shame, depression, and embarrassment that they have been so taken in by anyone.  Some just don’t have the energy to fight back and the thieves know this. They count on it!

What can the concerned financial professional do about financial elder abuse?  There are many ways you can be more vigilant and protective of clients.  Here are five things to keep in mind for any aging client.

1)  Know that even at the very earliest stages of dementia a client is likely to be moderately impaired for making safe financial decisions. Pay attention to their ability, or lack of it, to understand complex or risky products such as non-traded REITS, which regulators disapprove of selling to seniors.  Avoid suggesting or offering any products which require significant analysis by the client if you have even a hint of cognitive decline in your client.

2)  Know that age alone is a risk factor for developing dementia and its accompanying diminished capacity. By the time your clients reach age 85, at least a third of them will have Alzheimer’s disease or other dementia.  Two out of three persons affected by Alzheimer’s are women.  Be especially vigilant with your aging female clients.

3)  Know your client.  If he or she departs from a long-standing spending pattern and you suddenly see unexplained large cash withdrawals, be suspicious, ask questions, and probe.  Someone could have gotten control over your client’s account.  Don’t stand idly by. Get involved and find out what has changed. Report abuse if you suspect it. Take action to stop the abuse and protect your client.

4)  If you work in an organization where professional colleagues have aging clients and there is opportunity to either sell them unsuitable investment products or otherwise manipulate these elders, lobby your organization for enhanced and more frequent scrutiny of all client accounts for people age 65 and up. The Federal Government and state laws define an “elder” as someone 65 and above. Watch these accounts closely and in more detail.

5)  Develop your own best practices, senior-specific policy, in writing. Training in best practices and commitment to your clients’ safety will enable you to get it right. Once you have a clear policy in place for yourself or for your organization, everyone can respond to red flags of diminished capacity and warning signs of elder abuse in a uniform way.  Best practices and senior-specific policies will enhance your ability to honor your clients so you can protect them from predators.

Dr. Davis and Carolyn focus on a range of topics including: Aging Clients, Managing Clients with Diminished Capacity, How to Develop Senior-Specific Program Policies, Improving Intergeneration Wealth Transfers, and Preventing Financial Elder Abuse.

The inclusion of aging experts provides Ironstone with a broader range of services, including speaking engagement and/or one-on-one consulting for firms looking to educate their clients and their teams.

To work with Ironstone or our affiliates, contact us at 1.800.917.8020, email us, or complete our “contact us” form.

¹ NCPEA – National Committee for the Prevention of Elder Abuse,

Photo credit: ©iStock/Getty Images

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Author Bio

Ironstone is a learning and development consultancy with business acumen that translates across many industries. Our focus is on practice management strategies in order to enhance and improve both business and personal life. We support professionals who want major and comprehensive improvements that look at all aspects not just an isolated area for change. Ironstone has identified 4 key performance areas known as the Fundamental 4™, which are required to design, develop, and sustain a successful business.