Instances of financial abuse of the elderly are on the rise. So how can you tell if your client is a victim, and what should you do if they are?
There’s increasing concern worldwide about the number of cases of older, vulnerable people losing their savings and investments to family members, friends and others.
As a result, organisations around the country are beginning to take action. This includes the Australian Banking Association, which is lobbying for a new organisation that investigates elder financial abuse and also a national register for power of attorney orders.
Financial advisers are in a good position to see this type of abuse and possibly prevent it happening. So, what does financial abuse look like and what action can be taken?
Power of attorney
One approach by financial abusers is to organise a power of attorney so that they can cash in the older person’s assets, says Anne McGowan, CEO of Protecting Seniors Wealth.
“A senior person’s regular lawyer is unlikely to fill in the power of attorney paperwork if they suspect financial abuse, but I’ve heard stories of financial abusers continuing until they find a lawyer who will process the paperwork. That’s a way for abusers to access larger amounts of money,” she says.
“Another way is to convince the older person to sign over their house or another property. Real estate agents tell me they see that all the time.”
Financial advisers might see a client’s family member or friend accompany them to a meeting and request changes.
When is it financial abuse?
McGowan acknowledges it can be difficult for financial advisers to identify cases of abuse, particularly if their client doesn’t appear to have any suspicions.
There may be some red flags though. Advisers may get a feeling that something’s wrong if their client appears uncomfortable or when there’s a request to sell major assets.
While an adviser may not want to wade in with an allegation of abuse, McGowan says they could raise the idea of elder financial abuse with their client and discuss what it might look like for them.
“What I would suggest is that you work it into the conversation that there is a growing awareness around financial abuse. You could then recommend changes that could help protect the older person,” she says.
A formal agreement drawn up for any loans to family can also help.
“Sometimes senior people are financially in a position to assist their children and they may want to do that – there’s nothing wrong with that. But I’ve spoken to advisers who say it’s helpful to organise a loan or financial agreement that makes it clear that the money is to be paid back in case the older person needs to use it later for their aged care. Then they’ve got proof that they can get that money back,” says McGowan.
