Financial Elder Abuse Overview: Financial elder abuse, or financial fraud targeting elderly people with dementia or cognitive impairment, is a serious problem. State securities regulators, associations of doctors and social services agencies are joining forces to identify both victims and those who may be at risk. Proactive financial professionals, especially financial advisors and financial planners, would do well to familiarize themselves with this research, the better to serve older clients and their families, who might be targeted by scam artists.
Extent of Financial Elder Abuse: Some key statistics pointing to the extent of financial elder abuse, or the potential for it, are:
- Roughly 35% of the 25 million persons in the U.S. at age 71 or above have mild cognitive impairment or dementia, per a 2008 Duke University study.
- According to a MetLife study, the elderly lost about $2.6 billion to financial fraud in 2009.
- The nonprofit Investor Protection Trust finds that 20% of Americans over age 65, or 7.3 million people, have been victims of financial swindles.
Contributing Factors to Financial Elder Abuse: Cognitive impairment which may render elderly people unable to perform simple financial tasks like balancing a checkbook or more complex ones like recognizing a fraudulent investment pitch. Additionally, researchers at the University of Iowa have found that changes to the aging brain may make many older people less risk averse, thereby making them more susceptible to risky schemes.
The National Protective Services Association profiles the prime target for financial fraud as a frail white woman above the age of 70 who has cognitive impairment, is unduly trusting and feels alone or isolated.
Initiatives to Combat Financial Elder Abuse: In a pilot program, researchers from the medical school at Baylor University trained a group of 67 Texas doctors to recognize which patients may have been victimized, and which are at high risk. Working with Texas state securities regulators, these doctors lent valuable input to at least three investigations.
The Investor Protection Trust, in conjunction with their Elder Investor Fraud Survey, has developed a Clinician's Pocket Guide and Patient Brochure.