Take This Quiz: Can You Recognize Potential Financial Exploitation Of A Senior?

By Julie Jason, originally posted on Forbes.com

If you have a senior in your family, are you worried about him or her being scammed? Could you recognize potential vulnerability?   

Take This Quiz

Test yourself: Which of the following scenarios might indicate signs of possible senior exploitation?

1. Jane, 75, almost never withdraws money from her account. Jane’s husband of 50 years passed away a year ago. For the past few months, she has asked her broker to withdraw $5,000-10,000 per month. She explained that she is buying new furniture for her house.

2. At Jane’s September meeting with her broker, Jane brings a new friend. The new friend sits with Jane but does not say anything.

3. At Jane’s March meeting with her broker, Jane again brings her friend. This time the friend does all of the talking for Jane. Jane is uncharacteristically quiet and seems nervous.

4. All of the above.

This is a quiz question quoted verbatim from a training program for financial firms created by the Financial Industry Regulatory Authority (FINRA); the U.S. Securities and Exchange Commission (SEC); and the North American Securities Administrators Association (NASAA). The program, announced earlier in June, is titled “Addressing and Reporting Financial Exploitation of Senior and Vulnerable Adult Investors.”

What’s The Answer?

The answer to the quiz is 4, all of the above.

To learn more about how to spot things before they get out of hand, a very good resource I recommend is NASAA’s “A Guide for Developing Practices and Procedures for Protecting Senior Investors and Vulnerable Adults from Financial Exploitation.” NASAA is the nonprofit association of state, provincial and territorial securities regulators in the U.S., Canada and Mexico.

Spotting Red Flags

How can you tell if something may be amiss? In my world, I visit with my clients, many of whom are retired, and I interact with hundreds of members of the public through my presentations and writing. I can tell you that unless you are trained, picking up on vulnerability and exposure to potential exploitation is not as easy as you might imagine.

It helps to get some guidance from regulators, who have seen it all. Let’s go through a list that NASAA identifies as red flags:

First: “The investor appears unable to process simple concepts, such as:

• a decline in the ability to do simple math problems;
• difficulty in understanding important aspects of the account;
• difficulty with checkbook management; and
• confusion and loss of general knowledge regarding basic financial terms and concepts such as mortgages, wills, and annuities.”

Friends or family members may notice these signs but ignore them because they may seem like signs of just getting older. But, they shouldn’t. Read on.

Second: “The investor’s behavior is erratic, including:

• memory loss;
• difficulty speaking or communicating;
• inability to appreciate the consequences of decisions;
• disorientation with surroundings or social settings; and
• uncharacteristically unkempt appearance.”

In my own experience over the years, these types of behavior change are consequential, needing your attention.

Third: “The investor exhibits impaired judgment about investments or the use of money, including:

• interest in get rich quick schemes;
• extreme anxiety about the nature and extent of personal wealth;
• decisions that are inconsistent with his or her current long-term goals or commitments;
• and failure to fulfill financial obligations such as paying bills, or paying the same bill multiple time.”

With this last group of red flags, you can see the potential for the senior being drawn into a scam. If you put this grouping together with the second group of red flags, my personal view is that trouble is brewing. Care needs to be extended to the senior — in the right way. What is the right way will depend on the family.

What Should You Do If Your ‘Senior’ Is Vulnerable?

If you spot any of these red flags or combinations of red flags, what should you do?

What I’ve seen work best is to let your relationship with the senior guide you.

In some families, a child will step forward to raise awareness with his or her parents or siblings. In others, a close family friend may raise concerns. And in others, a financial, legal or investment professional may see signs that call for action.

Awareness comes first. With awareness comes potential next steps, which, by definition, will need to fit the family dynamic. Protecting the senior from harm will be the paramount concern. Reporting potential exploitation is the second priority.

When regulators created the training program I referred to above, they designed it to help financial firms train employees on “how to detect, prevent and report financial exploitation of senior and vulnerable adult investors.” The program is meant to serve as a resource for firms that are implementing the requirements of the Senior Safe Act, which was signed into law in 2018 as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The Senior Safe Act can provide immunity from liability for financial institutions that report the potential exploitation of a senior citizen, but those institutions need to meet certain requirements first.

Reporting Fraud

If you discover that a senior close to you has been exploited, you can make a call to the National Elder Fraud Hotline (1-833-372-8311). The Justice Department hotline has resources for reporting fraud situations.  

Every U.S. state has a version of adult protective services, where exploitation can be reported. The nonprofit National Adult Protective Services Association has a listing for each state.

Additionally, more resources can be found at the National Center on Elder Abuse website at ncea.acl.gov.

Questions?

Do write to me with questions at forbes@juliejason.com. Include your city and state, and mention that you are a forbes.com reader.

To read Julie Jason's books, go to: https://juliejason.com/books/julies-books.