Every day at least 1,000 elderly Americans are financially exploited or abused.
I heard this appalling statistic from Kathy Greenlee, assistant secretary for aging at the U.S. Department of Health and Human Services. Speaking at a day-long event sponsored by Women for a Secure Retirement, Greenlee (who also heads DHHS's Administration for Community Living) challenged participants to help her curb the terrible prevalence of elder abuse.
According to the National Center of Elder Abuse, part of the U.S. Administration on Aging, financial or material exploitation is defined as the illegal or improper use of an elder's funds, property or assets. Examples include cashing an elderly person's checks without permission, forging an older person's signature, misusing or stealing an older person's money or possessions, coercing or deceiving an older person into signing any document (e.g., contracts or wills) and the improper use of conservatorship, guardianship and power of attorney.
Greenlee's call to action prompted me to ask her for more information about her campaign against abuse and to learn how advisors can better protect their older clients.
Olivia Mellan: How big is the problem?
Kathy Greenlee: Researchers estimate that about one in 10 older adults is abused. We know that the number who are being financially exploited is greater than that. Most experts in the field believe that closer to four out of 10 older people are financially exploited.
This sobering statistic also reveals that only a small percent of cases are ever reported. Studies estimate that somewhere between 14 and 24 cases are undetected for each case that is reported.
Anyone who works with older clients can help stop abuse. Knowing the risk factors and red flags is key to identifying possible abuse. (See "10 Signs of Financial Exploitation," ThinkAdvisor.com.)
OM: What is the most common financial abuse scenario?
KG: When people hear "elder financial exploitation" they often think of Internet scams or phone schemes. Scams and other forms of fraud committed by strangers certainly exist, but the vast majority of elder abuse cases—about 90%—are perpetrated by family members, most often adult children and spouses, or by lawyers, bankers, financial advisors and other professionals trusted by the elder.
OM: Who is most vulnerable to financial abuse?
KG: Both men and women can be targets. People who are at highest risk for abuse—whether financial, emotional or physical—are those with disabilities or cognitive decline, such as early-stage Alzheimer's disease or other dementias. Executive function is the first impairment when cognitive decline begins, yet executive function is exactly what you need most when making financial decisions. Around half of all people with cognitive decline reported being mistreated by caregivers, according to a recent study.
Social isolation is the second big risk factor. That doesn't mean living by yourself; abuse can happen in any setting, at home or in a long-term care facility. Isolation means that the older person's social world has shrunk—they no longer spend time with their family, neighbors, faith community, whatever their social network may be. People who are socially isolated are at much higher risk for exploitation. Abusers often attempt to control communications between the person they are exploiting and their support system.
OM: Many elderly clients have adult children who manage their affairs. What should advisors be looking for when interacting with these children?
KG: Abusers often have mental or emotional illness or feel burdened by their role as caregiver. Many times in families, the sense of entitlement exceeds good judgment.
Family caregivers provide support to the majority of our country's oldest members. They are a tremendous asset and, unfortunately, also a big risk. Caring for an older person can be exhausting, which is why the programs that provide respite to caregivers can be helpful in preventing abuse.
