Financial Exploitation and Abuse of the Elderly and Other Vulnerable Clients

Financial abuse is the theft or mismanagement of a person’s funds, real estate, investments, or personal property. Anyone can be a victim of financial abuse, but particular groups may be especially at risk. Age and specific disabilities may have an impact on the individual’s capacity to make decisions which places them at increased risk of abuse. People with learning disabilities or other conditions that have led to cognitive impairment, and in some instances, people who have poor mental health may also be particularly at risk. The elderly, however, are probably the largest group of vulnerable clients and their numbers are expected to increase as the population ages. Like all abusers, financial elder abusers perceive the elderly as vulnerable and unlikely to fight back or expose the abuse. Financial abuse can be a one-time incident or it can continue for many years.

Elder financial fraud and abuse is estimated to cost victims about $3 billion a year, according to one study, though some say it’s actually much higher. Shockingly, around 90 percent of perpetrators are people the victims know and trust — family members, neighbors, friends or caregivers, according to the National Center on Elder Abuse (NCEA). The cases vary, from swindlers posing as trusted financial advisers to adult children taking advantage of parents’ vulnerability and assets.

• Each year 1 in 20 older adults is financially exploited by a family member
• Just 1 in 44 financial elder abuse cases is ever reported
• Women are nearly twice as likely as men to be victims

Sources:
U.S. Department of Justice www.justice.gov
National Adult Protective Services Association http://www.napsa-now.org/

Investment advisors are in a unique position to be on the front lines in protecting vulnerable clients. Be on alert and learn to detect suspicious activity. A few indicators can include, but are not limited to:

• signatures on checks, or other documents that do not resemble the vulnerable person’s signature or are signed when the person is unable to write,
• any sudden changes in bank accounts, including unexplained withdrawals of large sums of money by a person accompanying the vulnerable person,
• the sudden inclusion of additional names on an vulnerable person’s bank accounts or benefits payments – often these individuals are unrelated to the older person,
• abrupt changes to or creation of wills that leave most or all of the assets to a new friend or only one relative,
• the sudden appearance of previously uninvolved relatives claiming their rights to a vulnerable person’s affairs and possessions,
• unexplained sudden transfers of assets to a family member or someone outside the family,
• numerous small sums of cash being ‘given’ to, or money regularly disappearing after visits from a relative or neighbor,
• numerous unpaid bills when someone else is supposed to be paying bills for the vulnerable person,
• unusual concern by someone that an excessive amount of money is being expended on the care of the vulnerable person,
• lack of amenities such as TV, personal grooming items, appropriate clothing items, that the vulnerable person should be able to afford,
• the unexplained disappearance of funds or valuables such as jewelry, and
• deliberate isolation of a vulnerable person from their friends and family, resulting in the person caring for the vulnerable alone having total control.

In closing, it’s important for relatives, neighbors, and community members to look after society’s most vulnerable. Abusers are less likely to target elders who have a network of family and friends looking out for them. Keep your eyes open and trust your gut – your willingness to get involved could stop an elderly person’s abuse, while also preventing an abuser from harming other victims.

You can find more information on reporting suspected elder abuse at the following websites:

The State Resources section of the National Center on Elder Abuse websitehttp://ncea.aoa.gov/Stop_Abuse/Get_Help/State/index.aspx

The Eldercare Locator website or calling 1-800-677-1116
http://www.eldercare.gov/Eldercare.NET/Public/Index.aspx

The “Get Help” section of the National Adult Protective Services Association
http://www.napsa-now.org/get-help/help-in-your-area/

United States Department of Justice Elder Justice Initiative
http://www.justice.gov/elderjustice/

NCS Regulatory Compliance has been assisting broker-dealers and investment advisers with industry critical compliance responsibilities for over 25 years. We continue to provide products and services to thousands of firms in the financial services industry. If you have questions related to compliance obligations, compliance requirements, or other compliance topics, please contact us at info@ncsregcomp.com.

Maggie Tavares can be reached at NCS Regulatory Compliance by calling 561-570-1834, or by e-mailing her at mtavares@ncsregcomp.com.