Protecting Loved Ones from Financial Abuse

Published on 01-30-24

Protecting Your Loved Ones from Financial Abuse

Financial abuse of elderly citizens is one of the most common, yet under-reported, crimes in the United States. While many older adults have the mental acuity to protect their assets, the combination of cognitive decline and financial wealth make some older Americans easy prey for financial crime.

In 2022, there were more than 88,000 victims of elder fraud who lost an average of $35,000 each. The total amount of losses for the year was $3.1 billion, an 84% increase from 2021. Worse, true losses may be difficult to calculate since many incidents go unrecognized or unreported. Here are some tips and information to help protect yourself and your loved ones:

The Wide Variety of Financial Abuse:

  • Mismanagement of income, unauthorized property use, and fraudulent document signing are common tactics.
  • Deceptive investment offers, contractor scams, romance scams, and impersonation attempts also target seniors.
  • Abusers often exploit loneliness, cognitive decline, and lack of tech-savviness.

Red Flags to Watch For:

  • Abrupt changes in wills, suspicious "relatives" appearing, and unusual account activity.
  • Deviation from established withdrawal and transfer patterns.
  • Social media interaction with strangers, especially when the senior lives alone.

Building Your First Line of Defense:

  • Always work with someone you trust. Include these trusted individuals in financial affairs and discuss naming them as account contacts for regular monitoring. Appoint someone to receive account alerts and raise concerns on your behalf.
  • Regularly review account statements and transactions with your loved ones.
  • Advisors play a key role in detecting unusual activity and notifying compliance teams. Stay in contact with your advisor and perhaps set up a monthly or quarterly meeting.

Remember, financial abuse is a serious issue, but proactive measures can make a world of difference. Open communication, vigilance, and trusted relationships are your best weapons against this crime.

Sources:

  1. Morgan Stanley Legal and Compliance Division
  2. FINRA Report on FINRA’s Examination and Risk Monitoring Program