The Emotional Impact of Financial Elder Abuse

The Emotional Impact of Financial Elder Abuse

Oct 4, 2016 | aging, diminished cognition, elderly, finances for elders, financial elder abuse, handling money for seniors, scammers, seniors finances

The Emotional Impact of Financial Elder Abuse
When older persons are deceived financially by hose they trust the most, the emotional effects can be devastating. The problem of financial elder abuse costs our older population over $36 billion per year in the U.S. alone. The reasons for this rampant problem some call  “the crime of the century” are  complex. Many victims cognitively impaired in some way, and are therefore subject to the undue influence of greedy relatives, caregivers, professionals, or criminal  predators who strategically seek out  older victims. However, not all seniors who fall victim to financial abuse are affected by cognitive decline. Some competent people are seduced by unscrupulous sales pitches promising  big  rewards. Some are cheated by the Bernie Madoffs of the world and their cohorts who take advantage of  seniors  who  are  worried  about  having enough  money. These victims see the pitch or offer as a  way  to alleviate their money insecurity and they  give up  their  cash  to  those who  want  nothing more than  to take  it  and  run. Sometimes, the senior  may want to  get something  for  nothing  or  get  a  “great  deal’  with  very little  perceived risk.

Abusers are not always shady characters or unscrupulous family members. Sometimes they are legitimate organizations that simply find an opportunity to take advantage of someone with whom they already have a relationship. Using a relationship of trust to manipulate an older adult is called undue influence. The laws protecting them from being victimized by undue  influence  vary  considerably  from state to  state,  with  some defining it  so  vaguely  that enforcement  is  difficult. However, whether the law is used to convict  abusers  of this crime or not, the effect on an aging  person is  devastating.  It is hard enough to realize that one has been duped by a stranger.  When one understands that the manipulator is a trusted relative, friend, an organization in which  a  person  truly  believes  or  contributes to,  the  pain  is  even  worse.

Wanda’s  Case

Wanda was eighty-nine years old at the time her daughter, Janis, contacted an attorney. Janis reported that Wanda had been a member of her large church all her life and had been an active participant in the congregation. She had always made modest contributions to the church and trusted all of the other members. But over time, Wanda’s memory began to decline and she got confused easily.The church began a fundraising campaign for new construction. Wanda was asked for a donation, which she gave. Then another request came and Wanda once again complied. Wanda gave larger and larger donations to the church over the next year, with the checks totaling over $100, 000.  Janis grew increasingly alarmed, because her mother clearly  was  in  need  of  help.  Wanda was found lost and wandering near the church after one day. The church itself had recorded the incident and a church worker had taken  Wanda  home. Janis was concerned that Wanda would run out of?money. She was physically ok, but her mental condition was becoming  a  serious enough  problem  that Janis believed  she  should no longer  live  alone.  And Wanda trusted the church, to the point that she did not believe that anyone  there  would  do  anything  wrong. This was a case of the church using its position of influence over an  impaired  member  to  elicit  larger  and  larger  financial  contributions  from  her. They took advantage of an older adult who had become lost and confused after church, and they knew it. Wanda could not perceive that she needed care, which was going to be expensive, and that she could all  her  reserves  by  these overly  generous  donations.  She was not able to act in her own best interests.  She ?believed  that  she  could  not  possibly  run out  of money. When her daughter, Janis, tried to explain that she had to stop giving to the building fund,  Wanda  was incredulous. She simply could not process the reality that she was going to lose all her savings if she kept up the contributions.? She became angry with her daughter for even suggesting that her actions were not  right and that  the  church was  out  of line  doing  what  it  did.

Wanda’s emotional response to the abuse was to be in denial about it. She likely not able to fully process what had happened and felt that Janis was  being disloyal  to  the  church. The matter did get resolved. When the church was contacted  to  meet  and  discuss  the  pattern  of  solicitations they  had  sent  to  Wanda  and  their  record  of  her being  lost  after church  services,  they  immediately contacted  an  attorney  who put  a  stop  to  their  actions. Janis was able to watch over Wanda  after  that  and  she  did obtain  help  for  her. Wanda’s anger at Janis was an unfortunate effect of stopping the abuse. Wanda would likely have been angry at the church had she been able to perceive that she was being manipulated.  However, she was cognitively impaired and did not see?the full  picture.

The Emotional Impact of Abuse

Undue influence is not the only means of taking advantage of seniors. Any kind of elder abuse can be devastating. Denial is common after older victims discover financial abuse. When a scam is underway, they tend to keep  up  hope  and  continue engaging  with  the  scammer. Despite warnings from family, friends, and advice from knowledgeable  others,  they  continue to  believe that  the  big  payoff  is  coming. Or they are unable to embrace that  they  have  made  a mistake  and  trusted an  untrustworthy  person. Sometimes, even after the evidence of fraud mounts, the  victim  continues  to  give money  to  the  predator. They have put their trust in someone whom they very much want to believe  was trustworthy. When the payoff does not come, or nothing that  was  promised  materializes,  they  eventually  realize they  were duped. The effect is sometimes intense shame and embarrassment.  Living with this shame often leads to depression.

Suicides resulting from financial abuse have been reported.  Some never recover emotionally  from  the feeling  of  horror  that  they  were  “so  dumb”  as  to  fall for  a  scam  that  in  retrospect  looks a  lot  more  obvious.  It damages a person’s sense of self, and sense of being able to  trust  one’s  own  judgment.  It can go to the core of a  person’s  self-esteem,  leaving  the  victim with  a  belief  that  he  can  no longer  trust  himself with anything  financial. When a senior loses most or all of her assets and is left impoverished, it becomes a constant reminder of the  shame  of being  duped  by  someone  else. Losing a home can force the person to live somewhere he does not choose to be. That can be with relatives if available,  but  it  can  also  land  him in  a  Medicaid  bed  in a nursing  home  where  few  would  ever  want  to live  out their  last  years.

Prevention Strategies

No one is totally immune from fraud and financial abuse.  Anyone can be victimized. Many a sad tale is told by an adult child of a victimized aging parent that  “I trusted my father and didn’t want to question him.”  Or,  “I thought since my mom was a CPA, she would never fall for  that.”  Part of the problem is the perception adult children and even some professionals have that certain  folks  are  never going to  be  abused  financially  because  they  are  smart,  or experienced with money  matters. It is simply not true that education or experience protects everyone.  Working with older adults puts professionals in a position to  be  vigilant,  to  educate  about  the  risks of  abuse  out there,  and  mainly  to  pay  attention.

Using Resources to Help Victimized Clients

While the criminal justice system prosecutes the relatively small number of abusers who are reported to authorities, it does not  do  much  to  help the victims of abuse. Money stolen from older people is often long gone by the  time a predator is brought to justice. When a criminal is prosecuted successfully, the  court will  order  that  he  make  restitution  of stolen  monies  to the  victim,  but  enforcement of  restitution  orders  can be  problematic.

What is almost entirely lacking is any resource to help a victim of financial abuse manage the emotional effects of the crime.  We simply do not fund this in our justice system.  If victimized seniors wish to get emotional support or mental health help to recover from the impact  of  financial  abuse,  they  would  have to  do  so  on  their  own. The cost is clearly a barrier, though Medicare does provide for  psychological  services.  However, the benefit has limitations. A diagnosis is required for  the  provider  to  get  payment.  And many people attach a stigma to getting mental health help, which is an unfortunate perception that stops some from obtaining the needed  psychological  support  for  recovering. If there is a civil case of elder abuse with a successful outcome, and financial damages are actually awarded to the victim as a result, the award may include expenses for psychological treatment for the victim. Therapy is one means a victimized person  can learn  to  cope with  the  emotional distress, shame, and? humiliation of being taken advantage  of by any financial abuser. There is little doubt that those who receive supportive services after victimization  cope  better  and have  a  better  chance  of healing from  the  trauma.

Professionals’ Roles with Abuse Victims

Professionals who work with aging adults in any capacity will likely encounter someone who has been victimized or is in the process of  being taken  advantage of by  another.  It is important to know their own community resources to provide information to anyone who may need help. Understand how difficult it must be for the person who has been victimized, and offer a respectful referral  to  a  local  resource. Local mental health providers can be found through the American Psychological Association, Psychologist Locator, community service agencies such as Jewish Family  Service Agency  (serving people of all faiths), the  Alzheimer’s Association, or senior centers throughout the U.S. Most offer information and referral to local providers in the  senior’s  county.

Warning  Signs

When suspecting financial elder abuse, those working with them  should be  aware  of these warning  signs:

1.  The presence of a new “friend” in a client’s life who has an inordinate interest in the older person’s accounts  or  assets,  and who  gains access  to any  of them.
2.  Sudden change in a Durable Power of Attorney document.
3.  Isolation of the older adult from friends, family, and others close to them.
4.  Large gifts to strangers or people they don’t know well.
5.  Complaints about having reached maximums on credit cards when this has never happened  before.
6.  Frequent email or telephone contact with any stranger who establishes a relationship  with  the senior  that  seems  addictive.

With the effort of those in the community surrounding older adults, we can all  take  steps  to  intervene  and  prevent  or  stop  abuse. If something seems odd to you, speak up, ask questions, step  in  where  you can. You just might be the key to keeping a senior financially safe.  And if you learn of abuse in the  course of  doing  business  with  a  senior  client,  a  kindly  approach  in  offering emotional  health  resources  lifts both  you and  the  victim.

BY CAROLYN ROSENBLATT, RN, ELDER LAW ATTORNEY
Carolyn Rosenblatt has over forty-five  years of  experience in  her combined professions  of nursing  and  legal  practice. She is co-founder of AgingParents.com, a resource  for families, and Aginglnvestor.com, offering educational training and products. She can be contacted at  (415)  459-0413,  carolyn@aginginvestor.com.

REFERENCES
Journal of Accountancy.  2015.  “Emotional harm of elder financial abuse outweighs  its financial  damage."  www.journalofaccountancy.com/news/2015/jun/elderfinancial-abuse-201512535.html.  Accessed January 2016.
MetLife Study on Elder Abuse, www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf.  Accessed January 2016.
Rosenblatt, Carolyn. 2015. “Protecting Our Aging Parents from Abuse."  In The Family Guide  to  Aging  Parents:  Answers  to Your  Legal,  Financial  and  Healthcare  Questions.  Sanger, CA:  Familius, 284-296.,  2015.
“Common Elder Specific Issues." In Working With Aging Clients: A Guide for Legal, Business and Financial Professionals.  Chicago:  American Bar Association,  71-76.

This article was originally published in the CSA JOURNAL 66  / VOL.  2, 2016  / SOCIETY OF CERTIFIED  SENIOR  ADVISORS  /  WWW.CSA.US

The Inner Workings of Clients’ Financial Decision-Making Ability

The Inner Workings of Clients’ Financial Decision-Making Ability

Sep 28, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

The Inner Workings of Clients' Financial Decision-Making Ability

Whether you have a lot of older clients or just an occasional one, it's critical for every financial professional to understand whether a client can safely make decisions about money. It might seem straightforward when your client is able to carry on a conversation, talk about current events or make a joke. You assume she's fine, but it's not that simple. Conversational ability can mask a true disabling brain condition we call dementia. It does not reveal itself easily, particularly at the earliest stage.

The insidious onset of Alzheimer's disease or other dementia can sneak up on a client and affect the ability to exercise judgment about finances. To help your clients, you need to know the red flags of diminished capacity, a basic skill anyone can learn. You can get a free checklist to help your do that at AgingInvestor.com. But beyond that, it is critical to understand just how complex our capacity to make safe financial decisions is.

Research shows us that with the most common form of dementia, Alzheimer's disease, financial capacity is moderately impaired even at the very beginning of the disease process. By the time a client gets to the middle stage when symptoms are more obvious she is already severely impaired in her financial capacity. No one should be making independent decisions about finances with severe impairment of this capacity.

This financial ability is defined as "the capacity to manage money and financial assets in ways that meet a person's needs and which are consistent with his/her values and self interest." It is broken down into nine areas or "domains". These include cash management, basic money skills, bill payment, and financial conceptual knowledge. The ones an advisor is most likely to see and assess are knowledge of personal assets and estate and investment decision-making.

You may not discuss with your client whether he understands what a money market is but you will be ethically obligated to discuss the pros and cons of various suggested investments and the effect they will have on your client's overall financial picture. This is the area where older clients with impairment will not be able to process the information you are offering them. When they are affected by brain disease like Alzheimer's (over 5.5 million people are diagnosed now, with that number expected to rise dramatically) they will not be able to "get it". You are on dangerous ground if you proceed to recommend or sell any financial product in the face of serious doubt about a client's financial capacity.

Granted, many financial products are complicated and the average person may not grasp all the nuances. But when you believe your client is probably impaired and cannot understand any carefully worded explanation you give, you are exposing yourself to liability by going ahead with transactions for that person.

How could this get you in trouble? All of the regulatory agencies want you to keep your older clients safer and they have issued guidelines for how to do that. All of them want you to know the red flags of diminished capacity. Financial capacity is the most complex of the kinds of capacity a person can have. If you do not involve a third party to assist the client with financial decisions, you risk a bad outcome and regulatory prosecution. You also risk the heirs coming after you in civil lawsuits, charging that you should have known what everyone else knew at the time, that their mother/father was impaired and you should never have sold that, done that or caused the bad outcome.

This is a very real problem among financial professionals-- the failure to recognize and act on the warning signs of diminished capacity. If you are managing a retirement account for that client, beware even more. Acting in the client's best interest means that you need to understand when the client's financial decision-making capacity is going downhill.

This article just touches on the complexity of financial capacity. Everyone deserves to have a deeper understanding so you can avoid prosecution or questionable accusations about your recommendations or the client's investments. When the investment an impaired client went for at your suggestion loses money, you can bet someone will blame you if they can. Don't set yourself up. Don't make it easy for them to attack you.

The way around this risk of working with an impaired client is to have your client's permission to involve a trusted third party as a surrogate decision maker for all financial transactions. How you get that permission is the subject of another article and it needs discussion. In the meantime, take a deeper dive into the nuts and bolts of financial capacity in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices, available here. Chapter Two explains all you need to understand about the components of financial capacity. And the privacy question and how to get that trusted other involved is answered in the book too.

By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Sep 22, 2016 | aging investor, elder investor, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, investor, senior citizen investor, senior investor, seniors finances

Attention Financial Advisors:Do You Have A Colleague With Cognitive Impairment?

The financial services industry frequently shows concern about the problems of longevity and aging clients. Cognitive impairment, diminished capacity and dementia get air time with various solutions, mostly vague, offered by industry insiders. But one problem is not being addressed: the professional herself with cognitive impairment.

It's time to look at this as a real risk, not some unlikely possibility that can easily be taken care of by a succession plan for the professional's business. Dementia is a complicated disease. It sneaks up on people, with the early warning signs of short-term memory loss, followed by increasing difficulty with reasoning and judgment. If we had not witnessed this at AgingInvestor.com with impaired professionals ourselves, we might be fooled into thinking that professionals had figured out how to address it. Simply put, they haven't.

Let's look at the notion that all you need is a succession plan for your business and there will be no problem if you develop cognitive impairment yourself, or someone in your organization does. What's the flaw in this? It is that many people with early Alzheimer's or other dementia do not recognize that they are impaired. This phenomenon is called anosagnosia, an inability or refusal to recognize a defect or disorder that is clinically evident. Ironically, the part of the brain that reasons and analyzes is so affected by the disease that it is not able to process the information about one's own impairment.

How this plays out is that as a person ages and becomes more at risk for dementia, some will surely fall victim to brain disease. The odds are at least one in three by the time we reach age 85. The risk doubles about every 5 years starting at age 65. So some financial professionals are going to develop dementia and some will not know that they have any impairment. So they keep working. Others around them are afraid to raise the topic when alarming signs first appear. No protocol exists to ease a person out of the role to which they are accustomed, particularly when they tell you they're feeling just fine, thank you.

Busting The Myths

Myths exist. The first is that a financial professional, whether managing money for clients, selling products or addressing their taxes and accounting, will know that he or she needs to retire when the time comes. This is not what occurs. Many folks who have a good book of business and enjoy what they do will not look to retire by a certain age. They keep working, and consequently when they are impaired they put every client at risk.

Another myth is that somehow the doctor, the family or someone else will advise you when you have dementia and you will of course agree with their assessment. Denial is a frequent component of cognitive impairment, rooted deeply in fear of losing control over one's life. Even those who start to see and fear their own early difficulties with memory will cover it up, avoid facing it and carry on as if everything is fine. Even an annual physical checkup with the doctor is very unlikely to reveal the early warning signs of dementia unless the patient mentions cognitive problems to the examining doctor.

What Can Professionals Do?

As described in detail in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices, every organization needs a protocol to address the risk of diminished capacity in an impaired colleague. Few firms have a mandatory retirement age, but this option exists.

A protocol for advisors and others can look similar to the protocol every professional needs for aging clients. First, one needs a standardized way to spot the red flags of diminished capacity. Next, these must be regularly documented and contact with the potentially impaired client must increase. Third, a standard way to escalate the issue to knowledgeable others in the firm should exist. For clients who demonstrate the red flags, the organization must have a next step, which means contacting an appointed third party to become a surrogate decision maker. For professionals, a mandatory way to ease the person out of the job on a specific timeline should be in place, and this should become office policy.

It is time for every professional to look at the reality of the risk we all face with impaired cognition. It can happen to anyone. Your professional skill does not protect you from dementia. Wise planning for how you or your colleague would exit your job when you can't see why you need to must be on everyone's agenda.

By Carolyn Rosenblatt, RN, Attorney,  & Dr. Mikol Davis Geriatric Psychologist

AgingInvestor.com

Three Tips For Talking To Your Older Clients About Long Term Care

Three Tips For Talking To Your Older Clients About Long Term Care

Sep 20, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, investor, log term care, long term care insurance, senior citizen investor, senior investor, seniors finances

Three Tips For Talking To Your Older Clients About Long Term Care

When you look at an older client's portfolio, the biggest concern is probably about whether they have enough to last to the end.  You calculate the drawdown, the earnings, and you spend time on those figures.  But what about long term care?

This is the conversation the client doesn't want to have.  No one wants to think about being disabled or losing independence.

Of course, this is not realistic.  You, the planner may not want to bring up the subject because of your own discomfort, or because you aren't sure what to say, or perhaps because your client dismisses it if you do bring it up. But a competent planner and advisor must do so.

Consider this realistic typical scenario:

A health crisis happens to your client. It can be a fall, a stroke or heart attack, anything that is unexpected. First, there is a hospitalization.  OK, Medicare covers that, together with supplemental insurance. A rehab facility is next with therapy and nursing care.  Medicare covers that but only to a point. When the elder is ready for discharge, the client and family are told, sometimes a day or two beforehand, that they will have to get help for the aging loved one at home.  ”Doesn’t Medicare cover that?” they ask. Unfortunately, no, they are told.

The Cost 

So the family members and the client start scrambling to provide help at home. In some parts of the country the cost is about $30 per hour.  According to the Genworth 2015 Cost of Care study, the national median price for someone to provide help with bathing, dressing and walking or other hands-on home help is $20/hour.

When you do the math, you realize that even if your client needs just twenty hours a week at the average cost, it will add up to nearly $20,000 a year.  That is on top of other, non-covered medical expenses, such as physical therapy when Medicare stops paying, hearing aids, and many medications. And that is just the beginning.  Limited hours of home care often stretch into full time care as people  who have disabling conditions age.

Some people figure they can spend their assets and give things away so they can qualify for Medicaid.  I would not recommend Medicaid as the best way to get quality care.  First, one must be really destitute to qualify for it. And the state looks back at all financial transactions for a five year period in most states prior to the application to see what was going on, what transfers were made and if they were honestly done. Second, the care one receives under Medicaid is the most basic, may be of the lowest quality and typically is not what anyone really wants.

If you can prevent that choice, you will.  Your client could spend her last days in a three bed room in a dingy nursing home if she or anyone in her life thinks Medicaid is a fine way to pay for care.

The cost for quality care at home can be staggering.  In my own prosperous county, with a very high elder population, the cost of 24/7 care at home from non-nursing providers (home care workers) exceeds $200,000 per year.  That is on top of the ordinary costs of living a senior has, regardless of care. And she will still be paying her out of pocket costs for other things Medicare does not cover: many medications, other non-covered services, Medicare premiums, etc.

 Taking On The Long Term Care Discussion: Three things you should do

  1. You need to create a plan for how to pay for long term care in the future as part of your job of financial planning and retirement planning.  Your client is not likely to ask you about it. Do not wait to have these discussions. Cash for the unexpected need for care could be a major expense. Your client needs to know the facts and figures.  Most people grossly underestimate the costs. We have even seen financial industry publications naively state "Medicare pays for most things". It doesn't pay for what most people need to stay at home after any disabling condition arises.
  1. Educate your client about the likelihood of this need for future care.About 70% of people will need long term care in some form in their futures.  Failure to plan for it can bankrupt a person or leave them in serious debt toward the end of life. Or some investments could make cash inaccessible when needed.
  1.  Use resources to help yourself understand the real costs of home care, assisted living, and nursing home care.  In order to educate your client, you need to educate yourself first. The Genworth Cost of Care study is a good resource. Here at AgingInvestor.com, we also offer tools[1] to help you.  Be sure you have something to hand to and to discuss with your client.  The need is now for any retiree.

by Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Geriatric Psychologist

AgingInvestor.com

[1] The Family Guide to Aging Parents: Answers to Your Legal, Healthcare and Financial Questions, and Succeed With Senior Clients: A Financial Advisor's Guide To Best Practices and Working With Aging Clients, A Guide for Legal, Business and Financial Professionals. All 3 books are available at AgingInvestor.com and Amazon.com

 

Can Brain Images Tell You If Your Aging Client Can’t Handle Money Any More?

Can Brain Images Tell You If Your Aging Client Can’t Handle Money Any More?

Aug 3, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

The National Institute on Aging reports that scientists are using magnetic resonance imaging (MRI) of the brain to explore the parts associated with money managing abilities. Can we actually see a picture of this?

The report cites neuropsychologist and lawyer, Dr. Marson. “It’s the $18.1 trillion problem,” said Daniel Marson, J.D., Ph.D., professor of neurology at the University of Alabama at Birmingham, citing an estimate of household wealth held by U.S. adults age 65 and older. “That money is at risk in part because of the cognitive disorders of aging.”

We don't have a way to pinpoint an exact spot in the brain that would tell us that a person is or is not competent with finances, but the report describes novel efforts using MRIs to find out more than ever about the brain and financial capacity. Changes in certain parts of the brain are linked to loss of financial capacity.

New techniques are providing intriguing data on why older adults—even those who were previously quite savvy about finances—may lose their money-managing abilities,” said Nina Silverberg, Ph.D., program director of the Alzheimer’s Disease Centers at NIA’s Division of Neuroscience.

What does this mean for you and your aging client?  It may be one more objective way to verify what you already suspect: that an older client is not savvy anymore when it comes to handling finances. The trick would be persuading a client to get this brain image if you and the family suspect that the client is in cognitive decline. We don't have the MRI techniques nailed down to verify loss of money making decisions, but that seems to be on the horizon.

Meanwhile, every advisor needs to be aware of the subtle signs of impairment in your client. An aging client who is in the earliest stages of Alzheimer's for example, is already moderately impaired for making safe money decisions. That means that you, a responsible advisor have in place a clear path to bringing in a surrogate decision maker to help that client. Part of that $1.8 trillion Dr. Marson mentions as being at risk is what is paying your fees. Take prudent steps to protect it.

Learn fast about spotting diminished capacity with our downloadable free checklist at AgingInvestor.com.