Philly Fed on Elder Financial Victimization

Combining Forces to Combat Elder Financial Victimization
How Consumers Can Avoid the Financial Pitfalls of Cognitive
Aging and What They Should Be Asking Their Financial
Institutions

Jeanne Rentezelas, J.D.
Larry Santucci

June 2018

Federal Reserve Bank of Philadelphia




Abstract: Medical research has linked financial vulnerability to accelerated cognitive aging — the process by which cognitive abilities decline with age. Consumers who understand the risks of cognitive aging and what their financial institutions are doing to detect and deter financial crimes are better positioned to safeguard their retirement savings. In this paper, we examine how consumers and financial institutions can prepare for the financial pitfalls of aging. We present seven important steps that consumers aged 50 or older can take to protect themselves. We also provide consumers with a list of six questions to determine how well their financial institutions are prepared to detect signs of diminished financial capacity, elder fraud, and financial abuse, and to prevent financial losses from occurring.


Spoiler....

Financial Preparedness — The First Line of Defense

1. Assign trusted contacts to all financial accounts.
2. Prepare a durable financial power of attorney.
3. Prepare a will.
4. Keep up on the latest scams.
5. Monitor your credit and identity.
6. Consider hiring a money manager.
7. Consider purchasing financial account monitoring services.

Questions for Financial Institutions

1. How much and what type of training has the financial institution provided its staff
on how to recognize and react to signs of diminished financial capacity, elder
financial fraud, and exploitation?

2. What monitoring systems or technology is the financial institution using to enhance
its ability to detect unusual transactions?

3. What tools does the institution make available to its account holders and their
financial caregivers to help them detect suspicious account activity?

4. Does the financial institution have an emergency contact form and policies
governing when an employee should reach out to the person listed on the form? If
so, what is the policy?

5. Does the financial institution have policies to prevent an agent under a power of
attorney from abusing his or her access to an older person’s finances?

6. If the financial institution suspects financial abuse by a caregiver, trustee, guardian,
or attorney-in-fact, does it report the case to local law enforcement and adult
protective services (APS)?