Study: Elder financial abuse on the rise
By National Underwriter
By Maria Wood
In a recent poll, a majority of financial experts, medical professionals and social workers agreed that financial abuse and investment fraud aimed at the elderly is a worsening problem in the U.S. The survey was conducted by Investor Protection Trust (IPT), a nonprofit group dedicated to educating consumers on investment decisions.
Among the nearly 800 polled online in early June were state securities regulators, financial planners, medical professionals, caregivers/social workers as well as law enforcement officials and legal experts. Eighty-four percent said that financial swindles targeting seniors is getting worse today.
Further, 99% said that older Americans are either “very vulnerable” (75%) or “somewhat vulnerable” (24%) to investment scams. Most cited a senior’s weakening mental capacity as well as either mild cognitive impairment or Alzheimer’s disease as the factors making the elderly particularly susceptible to an investment fraud.
The report was released in advance of today’s World Elder Abuse Awareness Day and a White House Symposium on the topic held Thursday.
Cathy Weatherford, president and CEO of the Insured Retirement Institute (IRI), spoke at the symposium. In prepared remarks, she pointed out that the household wealth of boomers and seniors is rising. Citing a 2011 Pew Social and Demographic Trends Report, she said the average net worth of people 65 and older rose 42% between 1984 and 2099. Boomers, she further noted, control more than $13 trillion in investable assets.
Yet this growing wealth is coming at a time when boomers are seniors are worried about how to live comfortably in retirement.
“IRI’s own research shows that older boomers are especially in need of retirement advice, with one-half indicating that they will not have enough money on which to live comfortably throughout retirement, and more than two-thirds believing that they will not have enough money to pay for long-term care expenses,” Weatherford said in a prepared statement. “Unfortunately, these vulnerabilities and concerns can create situations where older Americans can easily be preyed upon by those seeking to capitalize on the situation for their own, unethical gain.”
Weatherford also said that working with older clients presents unique challenges for advisers and that women are twice as likely to be victims of elder financial abuse. “And there lies the real opportunity for our industry‑for us to help identify some of the so-called ‘red flags,’ as a trusted financial planner,” she said.
The IPT has held 430 continuing medical education courses to train nearly 3,000 doctors and other medical professionals on ways to spot potential elder financial abuse.
Dr. Robert Roush, director of the Texas Consortium Geriatric Education Center, Huffington Center on Aging, at the Baylor College of Medicine, said that it’s “a simple medical fact of life” that a person’s cognitive abilities become impaired later in life, making them highly vulnerable to being financially exploited. Therefore, it’s important to enlist the aid of health care professionals in the campaign to stop elder financial abuse. “State securities agencies deserve credit for being able to think outside of the box and take an important new tack in reducing the scourge of elder investment scams. Working together, clinicians and investor educators can make a difference,” said Roush in a release announcing the study’s findings.
Other findings from the IPT poll include:
- Nearly three out of four respondents (58%) said they deal with elderly victims of investment fraud/financial exploitation “quite often” or “somewhat often.” Fewer than one in 10 (7%) said they never deal with such victims.
- Nearly all‑96%‑say the problem of elderly investment fraud/financial exploitation in the U.S. is “very serious” (70%) or “somewhat serious” (26%).
- The top three reasons why elderly investment frauds go unreported are: “shame on the part of victims” (86%); “the ability of con artists to string victims along until it is too late” (80%); and “failure of adult children to spot the problem and intervene” (70%).