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Elder Financial Abuse's Negative Impact

The rise in elder financial abuse poses a serious threat to the security and dignity of seniors worldwide. With the increasing sophistication of scams and fraudulent schemes, it’s important to implement well-measured strategies to protect the elderly or cognitively challenged. And, let’s face it, with our busy lives, we’re just as much of a target as they are. After years of helping family and friends, plus what I’ve learned and developed as “best practices” as a Daily Money Manager, borrowing heavily from a variety of sources, observation, and low-skill technology, I developed the Financial Fortress framework to empower you and your loved ones with knowledge and tools for defense.
Senior Reading A Financial Newspaper, Symbolizing Elder Financial Awareness In A Secure Home Environment.

Elder financial abuse encompasses a wide range of exploitative behaviors, from misuse of an elder’s funds to manipulating or even abusing the purpose of legal documents. Financial Crimes Enforcement Network reports highlight an overwhelming $27 billion lost to such abuse in one year, signaling a dire need for comprehensive preventive measures. Understanding the extent and nature of these exploitations is the first step toward effective prevention.

(Source: HousingWire).

Tips and Safeguards Against Elder Financial Abuse

1. Recognize the Warning Signs

Understanding the common signs of financial abuse is the first step in prevention. This includes sudden changes in bank accounts, unexplained withdrawals, and the appearance of new ‘friends’ influencing financial decisions. An increase in the need for “privacy” or otherwise being secretive is another sign, and it’s perhaps the hardest to decipher, as they are adults and entitled to their independence.

In that vein, one of the best first steps is to increase financial literacy. This involves teaching them about the nature of financial scams, how to manage personal finances, and the importance of scrutinizing unusual requests for money or private information.

Regular educational sessions and reducing the stigma of asking for help can dramatically reduce their risk of exploitation. In situations where the client still have capacity, I like to advise clients and their families that the client is a CEO – that the wise, seasoned, CEO relies on a selected management team for advice and help. The CEO doesn’t mop the floors or doesn’t do all the accounting, but they’re making the decisions and a shrewd CEO asks for input and advice to make the best decision possible. Their goal is to make their business (in this case a household) as successful as possible and to do that they recognize they need a team.

  • Who is asking for information?
  • What information are they requesting?
  • Where are they asking me to send this information?
  • When or how often are they asking for information?
  • Why are they asking
  • How is that information being used? Is it being stored and how?

Awareness and changing outlooks to a more team approach can empower seniors and their families to act before significant damage is done.

2. Foster Open Communication

 Encourage regular discussions about financial matters within your family, or with some trusted professional or member of the community. This transparency helps to build trust and makes it easier to spot any discrepancies or unusual activities in financial accounts. I like to tell my clients that they’re now a CEO who delegates and knows when to rely on others; that asking for help is wisdom, not failure.

 

3. Use Professional Financial Services or Other Community Supports

Engage a daily money manager or financial advisor who specializes in elder finances. These professionals can provide oversight and regular reviews of financial activities to safeguard against unauthorized transactions (Source: NY State Department of Financial Services). These folks can be a neutral 3rd party and remove the emotions and drama from these discussions. Investment advisors and wealth managers are other resources who can help advise the senior and set up accounts that limit access and increase monitoring. Although they’re not able to do day-to-day security, they can provide other services or suggest financial products or features – like requiring two signatures for withdrawals about a certain amount or requiring withdrawals about a certain amount to be in writing – that help put in needed ‘financial speedbumps’ and make defrauding your loved one (or you) that much more difficult.

Aside from paid professionals, trusted members of the community such as clergy, can play a role in advising and facilitating healthy boundaries and build an appropriate network.

4. Secure, but Balance, Personal Information & Sharing

Limit the sharing of personal information. Teach seniors about the importance of securing personal data and avoiding sharing details over the phone or the internet, especially in unsolicited communications. For households with many visitors (ADL assistance, home health, etc.) be strategic about managing mail – consider locked PO Boxes or a designated person to retrieve mail and put it in a secured location for later review.

I particularly urge families to consider whitelisting phone and digitial communications – meaning that only calls and messages from those on a vetted contact list get through. The rest are sent to voicemail or deleted without being read. Although a software designed for families with children, Qustodio has a robust software package for desktops, laptops, tablets, and phones that makes whitelisting, email and communications filtering, and website filtering easy to set up and runs in the background.

I’ve come across a few time the suggestion for families to have a “passphrase” – and although I don’t disagree with the idea in general, an otherwise agreeable person might be okay with not accepting the passphrase and divulging information if they think the caller on the line is a loved one. With AI voice emulators, a targeted senior (or anyone for that matter to be fair), can be duped into recognizing an AI-generated voice and be willing to bypass the passphrase, especially if also convinced it’s an emergency situation. 

(If you’re interested in learning more tips and tricks, sign up for the next 1 hour, complimentary Financial Fortress workshop.

5. Legal Safeguards

Implement legal measures such as a durable power of attorney (PoA), which ensures that only a trusted person can make financial decisions if a senior becomes unable to do so themselves (hence the durable provisions) or the senior knows what they want to do, but the task is too difficult due to physical limitations or technological complexity. Many folks elect for PoAs with ‘springing’ provisions, meaning they take effect after the grantor is incapacitated, and overlook the usefullness of an immediate PoA where a designated trusted contact can help with the heavy lifting of organizing accounts and setting up safeguards. This reduces the risk of financial exploitation by unscrupulous individuals (Source: ElderLaw Answers) and has a person who can step in the client’s stead to help address any issues.

Conclusion

Elder financial abuse is preventable when armed with knowledge, proper safeguards, and community support. By following these five essential tips, you can help protect the financial integrity and independence of the seniors in your life.

Further Reading About Elder Financial Abuse

Need Help? Learn More!

For more detailed strategies and personal guidance on safeguarding your or a loved one’s financial independence, book a complimentary consultation or sign up for the next Financial Fortress Workshop.

 

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