Alzheimer's and Financial Exploitation of the Elderly
What has been coined as the “Golden Years,” ends up for many being a financial disaster, as is illustrated in Investment News and The Registered Rep. A study by MetLife Mature Market Institute reveals that some 1 million seniors are the victims of financial exploitation every year, with 1 out of every 5 seniors being targeted. These numbers are expected to increase in years to come as the number of the elderly, over 65, will double by 2030. Another issue facing many seniors is Alzheimer’s and how prepared those around them, including their financial advisors, will be to identify the signs and deal with the attendant problems.
Elder financial abuse or exploitation commonly involves family members, friends, caregivers, financial advisors and even strangers. The inability to make good decisions by older adults makes them easy targets for fraudulent schemes and practices. This can happen whether the senior lives in their own home or in a nursing facility. Typically the abuse takes the form of cash withdrawals or checks that are out of the norm; checks or gifts for a caregiver; transactions in accounts that have been dormant; missing expensive personal property; checks signed by the senior and filled out by someone else and large or frequent ATM withdrawals.
Alzheimer’s has become such a prevalent problem for seniors that the Financial Industry Regulatory Authority (FINRA) and the Alzheimer’s Association have teamed up to identify and advise the financial industry about issues they should be prepared to deal with. Understandably, a survey has revealed that 96% of the financial advisors felt like they did not know enough about Alzheimer’s and were unprepared to deal with those who suffer from it. Just as the numbers of seniors is projected to increase, the numbers of seniors with Alzheimer’s is expected to climb. Presently, some 5.4 million suffer from the disease. This is expected to grow to more than triple to 16 million by 2050. Memory loss, confusion and trouble handling and keeping up with money are huge problems that make these seniors even more susceptible to being targeted by scammers.
An additional problem with patients who suffer with Alzheimer’s is the added expense for treatment, putting an undue burden on the amount of money it will take to last throughout their retirement years and making it necessary to include planning for long term nursing care. John Gannon, Senior Vice President with FINRA’s Office of Investor Education, has said that it is always the best strategy for financial advisors to take a proactive approach and discuss the possibilities of dementia and what steps need to be taken to prepare for it. For example, seniors should make certain that powers of attorney have been executed, along with other documents necessary to transfer decision making authority to someone else regarding finances and healthcare. Another item that ought to be considered is the preparation of a will or updating an existing will, if one was previously prepared. Advisors should be aware of red flags of possible elder financial abuse related to their Alzheimer customers, such as frequent changes of beneficiaries in their will or on life insurance policies; increased activity in dormant investment accounts; frequent or additional withdrawals and increased donations to charities. Patience, understanding and talking to clients suffering from Alzheimer’s will help them plan and be prepared for what is to come, as well as to be on guard for perpetrators of elder financial exploitation.