As a financial advisor who works with older clients, you’re likely familiar with elder financial abuse. Perhaps you’ve even helped a client through a financially abusive experience.
Whether or not you’ve seen this issue firsthand, you may be surprised to know just how rampant a problem it is.
According to a 2015 report by True Link Financial, elderly Americans lose an astonishing $37 billion each year to schemes designed to take advantage of the particular financial and cognitive vulnerabilities of seniors. What’s more, many of these schemes are technically legal.
Although 1 in 9 seniors reports being abused, neglected or exploited in the past year - with 1 in 20 reporting some form of financial maltreatment - the odds of abuse are estimated to be higher.
Victims often suffer devastating consequences, including:
- Loss of trust and ensuing emotional isolation
- Anxiety and feeling of loss of safety or security
- Depression stemming from shame and self-blame
- Loss of resources to pursue legal action and remedial compensation
- Decreased quality of life
- Financial dependence
- Inability to obtain long term care
Financial advisors are often the first, and sometimes the only line of defense against exploitation, as 90% of elder financial abuse is committed by family members or trusted loved ones.
Financial advisors need to be familiar with and on the lookout for the most common forms of abuse by those close to vulnerable, elderly clients:
- Abusing power of attorney to divert funds for personal use
- Unauthorized use of joint bank accounts
- Failing to provide medical care or other services in order to preserve the elderly person’s assets for themselves
- Using deception, intimidation, threats of abandonment, or outright assault to obtain money or access to accounts
- Writing checks or using ATM cards to steal money from accounts
- Caregivers falsifying and overcharging for services, keeping change from errands, or simply neglecting their caregiving duties while continuing to be paid for them.
While elderly adults are most vulnerable to abuse by those close to them, financial advisors need to be equally trained to recognize the scams and frauds perpetrated on seniors by strangers:
- Predatory lending, in which seniors are pressured to take out inappropriate reverse mortgages or other loans
- Annuity sales schemes in which the elderly person is pressured to purchase expensive annuities which may not mature until the person is likely to be deceased
- Investment and securities schemes
- Internet phishing and identity theft
- Medicare scams
Not only do financial advisors need training in recognizing and reporting elder abuse to the proper authorities, they must also be prepared to take whatever steps are legal and appropriate to address senior financial abuse.
At Ashar Group, we work with advisors who adhere to the strictest of ethical standards to safeguard seniors and others who wish to unlock the value of a life insurance assets. Whether an asset’s value is dispersed through a lump-sum life settlement or a retained death benefit, we’re here to assist our clients in confidently taking the next step toward a secure future, and invite you to contact us today.