A recent study by the Center for Retirement Research at Boston College concluded that many retirees who do not suffer from any cognitive impairment can still manage their money through their 70s and 80s.1 The study reports that financial capacity relies on accumulated knowledge and that knowledge stays mostly intact as we age.
However, the study points out that it generally is not a good idea to start managing financial decisions in your late 70s and 80s if you haven’t had experience doing this before — such as after the death of a spouse who handled the finances.2 We work closely with our clients to help them develop financial strategies designed to last a lifetime, with the goal of reducing the need to make dramatic financial changes later in life. However, we are here to address any questions or concerns of our clients no matter what stage of their financial planning. Please give us a call; we’re here to help.
Having a plan for late-stage financial management is important due to the increase in elderly financial fraud. With more than 45 million seniors in America, this is a large and tempting market for scammers. One study estimated that about 5 million older Americans are financially exploited each year. In New York state alone, allegations of elderly financial abuse spiked by more than 35 percent between 2010 and 2014.3
In response to this growing problem, several government regulatory agencies have stepped up efforts to help prevent and address elder financial abuse, including the following:
- The SEC requires brokers to make “reasonable efforts” to identify a “trusted contact” for investment accounts and allows them to prevent the disbursement of funds from the account and notify the trusted contact if the broker suspects abuse.4
- The Financial Industry Regulatory Authority, or FINRA, set up a senior help line at 844-57-HELPS (844-574-3577)5
- In 2016, four state legislatures approved a rule requiring advisors to notify adult protective services and state regulators if they detect abuse; 10 more states are expected to adopt similar rules this year, and three other states already had such rules in place.6
According to the National Committee for the Prevention of Elder Abuse, some of the most common ways the elderly are taken advantage of financially are: forging their signature; getting them to sign a deed, will or power of attorney through deception, coercion or undue influence; using their property or possessions without permission; and telemarketing scams. Some of the most likely perpetrators of elder financial abuse are: family members; predatory people who seek out vulnerable seniors; and unscrupulous business professionals.7 If you believe you are a victim of fraud, contact your local law enforcement, state agency on aging and/or a community senior services group.
Content prepared by Kara Stefan Communications
1 Anek Belbase and Geoffrey T. Sanzenbacher. Center for Retirement Research at Boston College. January 2017. “Cognitive Aging and the Capacity to Manage Money.” http://crr.bc.edu/briefs/cognitive-aging-and-the-capacity-to-manage-money/. Accessed June 22, 2017.
3 Christine Idzelis. Investment News. April 23, 2017. “Advisers on front lines in battle against financial abuse of the elderly.” http://www.investmentnews.com/article/20170403/FEATURE/170339977. Accessed June 22, 2017.
4 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.
5 FINRA. “FINRA Securities Helpline for Seniors.” http://www.finra.org/investors/highlights/finra-securities-helpline-seniors. Accessed June 22, 2017.
6 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.
7 National Committee for the Prevention of Elder Abuse. “Financial Abuse.” http://www.preventelderabuse.org/elderabuse/fin_abuse.html. Accessed June 22, 2017.