How You Can Prevent Elder Financial Abuse

Elder Financial Fraud on the Rise

According to the Financial Crimes Enforcement Network of the U.S. Treasury Department: “Elder financial exploitation Suspicious Activity Reports (SAR) filings increased…from about 2,000 filings per month in 2013 to reaching a peak of nearly 7,500 filings per month in August 2019.” [1]  As the number of elders rises, the number of financial crimes against elders is projected to rise. Not a shock but something to keep in mind if you have an aging client base.

Family Members and Caregivers Most Often Implicated

“When an elder is the victim of theft from a bank or brokerage account, according to SAR reporting, family members and non-family member caregivers are most often implicated.” [1] It is terrible to know, although perhaps it should not be, that those closest to a person most often steal money from them. As you may imagine, elders who suffer from cognitive impairment are even more vulnerable.

How Can Financial Advisors Help Prevent Elder Fraud

First, understand there is a problem and that it is growing larger by the day. Seniors are losing almost three billion dollars a year to fraud. [2]  

The following list of “red flags” for elder financial abuse comes from the Securities and Exchange Commission (SEC). [3]

• Sudden reluctance to discuss financial matters
• Unusual or unexplained account withdrawals, wire transfers, or other financial changes
• Cash or other items missing from the home
• Drastic shifts in investments
• Abrupt changes in wills, trusts, power of attorney, or beneficiaries
• Concern or confusion about missing funds.

We Are On the Front Line in this Fight

We, as Financial Advisors, are on the front lines of this fight. We’re the ones who will first see a request for a large amount of money to be wired to someone out of state or out of the country. Under many circumstances, you can put a temporary hold on wire transfers.  We are not attorneys, and we are not giving legal advice. But we suggest you ask your firm’s legal department about the details.

Senior Safe Act

This federal statute was passed in 2018. According to the fact sheet issued by the SEC this act:

“…for financial institutions and certain eligible employees, affiliated persons, and associated persons (“eligible employees”), who satisfy its requirements, the Senior Safe Act provides immunity from liability in any civil or administrative proceeding for reporting potential exploitation of a senior citizen.  As an example, this immunity can be helpful when a firm wants to report potential exploitation but fears that the report could violate a privacy requirement.”

Ask your legal department about this before acting. The fact sheet can be found here: https://www.investor.gov/senior-safe-act-fact-sheet

This problem will continue and will get bigger. But unlike the people who write about this issue, study it or worry about it, we as Financial Advisors can actually do something about elder financial abuse. Be aware of this issue. If your client does something out of character with their money, pay attention. Ask questions. You will be doing your client a great service.

Resources: 

[1] https://www.fincen.gov/news/news-releases/fincen-analysis-bank-secrecy-act-reports-filed-financial-institutions-help

[ii] https://www.cnbc.com/2019/02/24/advisors-take-extra-steps-to-protect-elder-clients-from-fraud-or-abuse.html

[iii] https://www.investor.gov/additional-resources/specialized-resources/caring-loved-ones/elder-fraud

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Contributing Writer: Subject Matter Expert Charles McCain