Are you paying as much attention to Financial Elder Abuse as you should be?

Regulators and the media are paying a lot of attention to Financial Elder Abuse recently – are you? What are you doing to protect your clients and your practice?

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What is Financial Elder Abuse?

“The fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.” – The Older Americans Act of 2006

What are the facts?

-          1 in 10 seniors are victims of neglect, abuse

-          Annual loss due to financial abuse is 2.6 billion

-          ONLY 1 in 44 cases of financial elder abuse is reported

-          90% of abusers are trusted family members or friends

-          60% of family perpetrators are adult children

-          The typical victim is a woman aged 70 - 89

-          Abused seniors are 3 times more likely to die and elder abuse victims are four times more likely to go into a nursing home

What are your legal obligations and rights as an advisor?

FINRA just passed a new rule - Rule 2165 Financial Exploitation of Specified Adults. It requires brokers to:

-          Permits advisors to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation

-          Provides brokers with liability protection if they place a hold on disbursements from an account because they think their clients could be harmed

FINRA just amended Rule 4512, Customer Account Information Rule. It requires brokers to:

-          Requires brokers to make a reasonable effort to identify a trusted person who can be contacted if the broker is concerned that the client is suffering from diminished mental capacity or is the target of a scam

-          The request for a trusted contact must be made at account openings for new clients and during account updates with existing clients.

-          If the client declines to provide a trusted contact, the broker does not have to keep pushing

For more information about FINRA Rules 2165 and 4512, FAQ’S are answered HERE:

You may also live in one of the 13 states that have passed a version of the North American Securities Administrators Association’s model rule that:

-          mandates that advisors report suspected abuse to certain state authorities

-          allows advisors to stop disbursements from seniors' accounts

-          gives advisors protection from liability

NASAA’s president, Joseph Borg, stated earlier this year that roughly ten more states are expected to follow suit, depending what happens with a bill that’s currently passing through Congress called “The Senior Safe Act”, which has similar parameters.

For more information about other legislative efforts against Elder abuse, click HERE.

How can you help?

Educate your clients:

Give clients examples of common Financial Elder Abuse situations from trusted family members:

-          Money or property is used without the senior's permission or taken from them, for example removal from their home and then use of the home by the abuser, or depositing income such as pension or benefit checks

-          The senior's signature is forged, or identity is misappropriated for financial transactions

-          The senior is coerced or influenced to sign over deeds or wills, or caused to execute legal documents they do not understand

-          The abuser fraudulently obtains a power of attorney or guardianship

-          Money is borrowed from the senior and never repaid

Give clients examples of scams, fraud, misleading marketing by legitimate businesses:

-          fraudulent investment or insurance schemes

-          fraudulent contracts and unauthorized charges imposed by internet service providers

-          worthless "sweepstakes" that elderly persons must pay in order to collect winnings

-          fake pharmaceutical or diet/health products

-          medical billing scams and unnecessary medical care

-          predatory or unnecessary lending, for example reverse mortgages

-          charitable giving scams, including pressure to rewrite wills

-          identity theft

-          lottery scams

-          work from home schemes or other ways to generate income

Other examples can be found here:

Ask questions:

-          Start the process with the simple question, “Who do you trust?”

-          Know that this a question they may not have been asked by a financial advisor or have an immediate answer to

-          Find out their contact information and set up open communication lines between you and that trusted individual incase you need to contact them

-          Asking who they can trust can be a part of a larger and deeper conversation with the client about family, financial goals and obligations, and the “what if’s” of a financial plan

Advise them to:

-          Stay organized – keep track of important documents and possessions

-          Open and send their own mail

-          Complete and sign their own checks

-          Screen calls and let them go to voicemail if they don’t recognize the number

-          Consult with their financial advisor and lawyers before making major changes to wills and titling of assets

-          Make sure that wills, advanced directives, and powers of attorneys are executed so that trusted individuals will step in and make decisions as necessary

-          Feel empowered, in control, and use their voice to contact authorities if they feel something is off

Keep an eye on things:

-          Help the client set up a plan for when they are unable to manage their own financial affairs using trusts and powers of attorneys

-          Pay attention to changes that may indicate signs of elder abuse

-          Stay appraised in current elder abuse trends and how to avoid them

-          Report cases of abuse

A list of indicators can be found here:

Know how to contact the proper authorities:

-          Local law enforcement

-          Senior’s financial instituion

-          Adult Protective Services in each state

-          FINRA’s toll-free help line:

o   844-574-3577 (or 844-57-HELPS)

Last but not least, this WILL boost your business in several different ways: 

- Create a referral network and partnership with attorneys, lawyers, estate planners to get trusts, powers of attorney, and wills in place

- Become more referrable by your clients as someone who is doing something other advisors likely AREN'T doing for them

- It will be easier to work with clients who have their finances in order and are set up for financial, mental, physical wellbeing in the future

If you have any questions or want to discuss this topic in further detail, schedule a call with me by CLICKING HERE. 

To access the new Ibbotson white paper on a better bond alternative, click HERE. 

Connect with me on LinkedIn HERE.

Visit the Kestler Finanancial Group website HERE. 

Citations and other resources:

National Center on Elder Abuse: