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Financial Planning

What your clients should know about elder financial abuse

Millions of older Americans face financial abuse each year. In fact, one in 20 seniors report being financially mistreated, according to the National Adult Protective Services Association. The average victim suffers a $34,200 loss, and elder financial abuse accounts for over $36 billion in damages annually.

The problem is only getting worse as baby boomers age. The average adult over age 50 has a net worth of $1.2 million, making seniors highly desirable targets for scammers.

Many of your clients may not be aware of the risks or consequences of elder financial abuse and how it can impact their future. Luckily, there are ways you can keep your clients and their loved ones safe, and help them protect their financial future for years to come.

Most common types of elder financial abuse

Financial exploitation can take many forms, including:

            • Identity theft
            • Property theft
            • Lottery, sweepstakes and charity scams
            • Extortion
            • Investment schemes
            • Predatory lending
            • Internet scams
            • Misuse of authority
            • Counterfeit or fraudulent drugs and anti-aging products
            • Homeowner and reverse mortgage scams

Help protect your clients

Educate clients about warning signs.

Common signs of elder financial abuse include unusual bank activity (such as frequent withdrawals), new joint accounts or unexplained credit cards. Checks noted as "gifts" or "loans," or those signed with suspicious signatures are suspect, as well.

You have an opportunity to educate your clients on the signs of financial exploitation, and may consider using your marketing channels to publish information on this topic. For example, you could create an email campaign on preventing elder financial abuse or publish a blog series on your website.

Encourage them to take proactive steps.

Assist your clients with setting up a power of attorney so a trusted person can manage their finances if they become unable to do so. A revocable or "living trust" can also safeguard your clients' assets.

Establish relationships with beneficiaries.

Sixty-six percent of adult children fire their parents' financial professional after receiving an inheritance. That means not only is building a relationship with your clients' beneficiaries crucial to the longevity of your business, but it's also critical to your clients'  safety — most elder financial crimes are committed by people who are close to the victim, such as hired caretakers, family members or friends.

For that reason, it's important to build rapport with beneficiaries. Maintaining open communication also ensures you can reach out should you spot suspicious activity or have other concerns.

Follow FINRA rules.

Passed in 2017, FINRA Rule 4512 (Financial Exploitation of Specified Adults) requires that financial professionals ask clients to designate a trusted contact on brokerage accounts. If a financial professional reasonably suspects financial exploitation, they may place a temporary hold on the disbursement of funds or securities from the account of an older adult.

Provide resources.

If you suspect elder financial abuse has occurred, there are steps you can encourage your client to take, including:

            • Reporting the crime to the proper financial institutions.
            • Filing an FTC identity theft report.
            • Contacting their local Adult Protective Services office.
            • Filing a police report.
            • Pursuing a court order for removal if someone is misusing a power of attorney or their role as guardian.

As a financial professional, you're in a unique position to prepare your clients for a financially secure future — one that doesn't include getting scammed.

Find out more about how to help your clients plan for each stage of retirement.


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