Financial Exploitation: Protecting the Elderly

As Oscar Wilde once said, “With age comes wisdom.” While that may be true to a degree, it is no secret the unfortunate byproduct of advancing age is the deterioration of one’s physical and mental abilities. While diminishing capacity is obvious in some people, it is more subtle in others, leaving them unprotected and vulnerable to potential abuse.  In today’s rapidly changing world, one of the most prevalent types of abuse is Financial Exploitation.  According to the National Council on Aging,  approximately five million elderly men and women are abused each year, with financial losses of more than $35 billion.  As friends, family members, and trusted advisors, we must be keenly aware of this dynamic to ensure the best interests of the elderly are served. Below are important planning tips for anyone you know who is entering advanced age or is caring for someone who is:

Know the Signs of Cognitive Impairment

One of the most useful ways to protect those who are in their advanced stage of life from financial exploitation is to understand and be able to identify the signs of cognitive impairment. Below is a list of common signs to watch for:

  • Forgetfulness (i.e., Important dates, recent conversations, names, etc.)
  • Overwhelmed with basic directions or instructions
  • Impulsiveness (i.e., Random purchases, spending/gifting large sums of money, etc.)
  • Disorientation (i.e., Problems navigating familiar environments)
  • General Irritability/Depression

A more detailed breakdown can be found through the Mayo Clinic – Cognitive Impairment.

Be Aware of Potential Threats 

The next step in the fight against financial exploitation is threat awareness.  According to the National Adult Protective Services Association, the most common threats include:

  • Theft (i.e., Cash, valuables, personal property, etc.)
  • Misappropriation of Funds (i.e., Trusted family members or advisors)
  • Predatory Sales Practices (i.e., Insurance/annuities, loan scams, contractors charging for and not completing work)
  • Lottery Scams (i.e., Transferring of funds to collect “prizes”)
  • Electronic/Online Scams (i.e., Phishing schemes for passwords/vital information, Healthcare frauds, Investments Schemes, etc.)

The recent release of third stimulus checks has presented would-be criminals with easy opportunities to scam people, specifically the elderly. According to a CNBC article, scammers are using bogus emails that appear to be from the IRS to get individuals looking for their stimulus payments to click on links to access additional information. Of course, the link is a trick to gain personal information that can be used for identity theft and stealing financial information. Government imposter scams are on the rise and since COVID’s inception, over $450 million in losses have been reported.

What’s the plan?

With financial exploitation on the rise, it is more vital than ever to develop a plan to prevent this kind of abuse.

What can you do?

1) Build a trusted team of advisors, including Certified Financial Planners™ and tax and legal advisors as early as possible.

2) Ensure Powers of Attorney and other legal documents reflect your wishes.

3) Educate yourself, family members, and caregivers on what to look for (See Above!).

4) Trust, BUT VERIFY, family and friends! Unfortunately, over 30% of financial exploitation is committed by family and friends so designating an objective “Trusted Contact” may be necessary. The Trusted Contact’s role is to be a resource for financial advisors, brokerage firms, banks, etc., to contact in the event exploitation is suspected.  The Trusted Contact’s role is NOT to make financial decisions as this is the role of a Power of Attorney.


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certified financial planner Marshall Clay wears a gray jacket and white shirt while posing for professional photo in office

Marshall Clay CFP, J.D., is a Partner and Senior Advisor at The Welch Group, LLC, which specializes in providing Fee-Only investment management and financial advice to families throughout the United States. Marshall is a graduate of the United States Military Academy in West Point, New York, the Cumberland School of Law in Birmingham, Alabama, and is a CERTIFIED FINANCIAL PLANNER™.  In addition, Marshall is a frequent guest on local television stations as an expert on various financial planning matters.



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