The Next Tsunami: Elder Financial Exploitation

Brooke Astor Trial Exposes Financial Abuse; Mickey Rooney, 90, Victim of Alleged Elder Abuse; Elder Abuse expected to grow in the coming years. We have all seen similar headlines, many of us read the headlines thinking this won't happen to my family, why should I be concerned? When speaking with associates about fighting financial elder abuse, they are not even aware of what it is let alone that it is a problem. As someone who has been in the financial sector for numerous years and a Gerontologist, it is becoming evident that these two very separate worlds are colliding. Not only do most people not realize the huge impact of elder financial exploitation, but we are not even sure who the victims are or how the financial sector will deal with the future tsunami of elder customers as the population ages.

Elder financial exploitation is defined as the "illegal or improper use of a disabled or vulnerable adult's funds property for personal gain or profit."1 Financial elder abuse also includes the "misuse of durable powers of attorney and bank accounts and the misuse of authority by a guardian or conservator."2 The illicit partaking of the adult's funds can vary from a grandchild taking funds from grandpa's sock drawer to a total stranger entering a vulnerable adult's life that seizes all their property and disassociates them from their family members. This could be due to diminished capacity, undue influence, or a family who does not care. But this does not help with truly identifying what financial abuse includes. What about a situation where a grandmother is convinced to send over $300,000 to receive a larger financial award and once the money is sent more money is asked of the elderly respondent. Yes, this does and will continue to happen to people that are trusting or those who believe they are about to have all of their dreams come true. Another example is a home repair in which "two elderly women were beaten to death with a crowbar by their trusted handy man,"3 or the senior who lives alone and falls prey to a home repair scam that comes in and offers to pave their driveway with extra material they have from a previous job. Just imagine if your grandfather was lonely and suffering from early stages of Alzheimer's disease and someone entered his life and stole his life savings and left him despondent in an unfurnished cold apartment or your aunt who was suffering from dementia was locked in a closet for months by a companion who lived off her money during that time. Even the U.S. Immigration and Customs Enforcement (ICE) has recently uncovered a telemarketing operation affecting more than "five million victims, who suffered losses totaling more than $1 billion" spanning over 35 counties including the United States.4 Dubbed "Operation Roaming Charge" it was said to have had links to organized crime and this is an aspect that is not taken into consideration often enough when considering elder financial exploitation.

According to National Center on Elder Abuse (NCEA), financial exploitation "may compromise victims' independence and security, destroy legacies, and lead to depression, hopelessness or even suicide."5 Individuals, who have been victimized by financial abuse, die three times faster than those individuals who have not been exploited.

Why are the elderly targeted? Older individuals have a tendency to be more trusting, less likely to report a theft for fear of embarrassment, shame, intimidation by the abuser, or fear they will be "put away." Family history my play a part in the abuse, they have been a victim of domestic violence in the home, or even an abusive parent to their children. Sometimes, caregivers and children feel that they are entitled to the money since they are taking care of the individual. They want their money now, and do not want to wait until the death of the individual. The elderly sometimes are not even aware they have been a victim, or they may not be able to remember exactly what happened or can provide an accurate description of the offender. Habits of seniors also make them a likely target for financial exploitation. They generally travel the same routes to and from the bank or stores, are home during the day creating a prime target for the fraudulent home repair scams. Another worry is that typically, once a person has been victimized, they have a high probability of being a repeat victim. "Twenty percent of Americans age 65 and older, more than 7.3 million senior citizens, already have been taken advantage of financially in terms of inappropriate investments, unreasonable high fees for financial services or outright fraud."6

As we know, the baby boomer generation will be with us for the next forty years and so will exploitation situations

Over the next twenty years, the 65 plus population in the United States will double to 71.5 million people by 2030 and by the year 2050 the older population will account for 86.7 million people.7 This year, 2011, is the first year the baby boomers began to turn 65 years of age and they control more than $13 trillion dollars in household assets. Financial elder exploitation is now being called the "crime of the 21st century" and is the fastest growing category of elder abuse. Currently, seventy percent of our nation's wealth is controlled by individuals over the age of 50, and it is estimated $2.9 billion are lost as a result of elder financial exploitation.8 It has been "estimated the overall reporting of financial exploitation is only 1 in 25 cases, suggesting that there may be at least 5 million financial abuse victims each year."9 If this is the case, then the estimate of $2.9 billion could be dramatically understated. Is this only the tip of the iceberg? The lack of reporting may stem from a variety of factors including: shame, fear of retaliation, fear that a family member may go to jail, feelings by the victim that they are responsible for the abuse, or even not even realizing they have been a victim.

So who are these individuals who fall prey to financial exploitation? The typical victim is between the ages of 70 and 89 years, white, female, frail, socially isolated and cognitively impaired. But the experts cannot decide who are most vulnerable, since a study out of University of Pittsburgh has indicated African American elders may face financial exploitation five times more than expected.10 But do we really need to know who the most likely victim will be or should we just acknowledge a problem exists and begin to implement departmental procedures regarding the issue.

"Considering that more than 8,000 baby boomers will turn 65 years of age each day beginning in 2011" it is time for the banking sector, brokerage sector, and even baby boomers themselves too seriously begin to plan for their advancing age and ways to avoid becoming a victim of financial elder abuse. Let us highlight some federal initiatives starting in 2006.

The Securities and Exchange Commission (SEC) and The Financial Industry Regulatory Authority (FINRA) have been introducing rules and regulations since 2006 concerning aggressive sales/seminars to seniors; falsely using senior designations and suitability of investments to seniors.11 FinCEN has recently, in February 2011, issued an advisory to include the terminology of elder financial exploitation in the narrative portions of a Suspicious Activity Report (SAR) form. They have also issued a list of common red flags which indicate elder abuse. These could include the following:12

Erratic or Unusual Account Transactions:

  • Uncharacteristic attempts to wire large sums of money
  • Closing of annuities or accounts without regard to penalties

Interactions with Customers or Caregivers:

  • The Investment Executive is unable to speak directly with the elder, despite repeated attempts to contact him or her;
  • The elderly individual's financial management suddenly changes, such as through a change of power of attorney to a different family member or a new individual;
  • The elderly customer lacks knowledge about his or her financial status or shows a reluctance to discuss financial matters.

Locally, in an effort to fight Medicaid fraud and elder abuse, Virginia Attorney General, Ken Cuccinelli, "has expanded the Medicaid Fraud Control Unit from more than 40 employees to nearly 80 workers" where "last year, the unit recovered more than $15 million.13

In 2000, the Elder Financial Protection Network (EFPN), a non-profit organization in California, was created to promote programs to prevent elder financial exploitation.14 EFPN offers educational programs and raises community awareness on elder financial exploitation. In 2002, the Office of Attorney General of California published a guide for its citizens on preventing and reporting elder abuse.15

Under the guidance of Secretary of State Robin Carnahan, Missouri "launched and expanded senior outreach and awareness campaigns, supported important changes in laws and rules that will increase senior protection, and conducted innovative regulatory activities and programs aimed at protecting Missouri's senior investors."16

In 2007, the team of Sawicki, Szuch, and Sherman & Reed suggested financial firms should consider appointing a representative to follow the issues raised as concerning by groups such as AARP and the Alzheimer's Association. Reminiscent of the AML designee, the representative would stay updated on current events for their senior customers. Additional recommendations were for financial firms to consider educating their senior clients about how to avoid being victims of financial fraud, including making investor education material prepared by regulators and other sources available to senior investors.17

As we know, the baby boomer generation will be with us for the next forty years and so will the number of elder exploitation situations. In order to protect our senior population as well as avoid future litigation, financial institutions should consider implementing compliance departments which are solely devoting to our senior clients to help prevent financial elder abuse. The elderly financial exploitation team would review appropriate trades for suitability, review expenditures for consistency, and that these expenditures match the lifestyle of an older adult as evidenced by past financial transactions. This team could also provide continuing education seminars for the registered representative to enable them to be on the forefront for scam and fraudulent activities which may target the older population. Hopefully these implementations would prevent abuse of some of older clients—you be the judge.

Linda B. Trimmer, MSG, Gerontologist/Volunteer Ombudsman,

Additional information:

The views expressed in this article are those of the author and do not necessarily represent views of employment from current or past financial services employers.

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  3. The MetLife Study of Elder Financial Abuse: Crimes of Occasion, Desperation and Predation Against America's Elders. (2011, June) Retrieved from
  4. Operation Roaming Charge. (2004, October). The Cornerstone Report, I (4), 3-5. Retrieved from
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  6. Jackson, S. L. & Hafemeister, J. D. U. S. Department of Justice, (2011). Financial abuse of elderly people vs. other forms of elder abuse: assessing their dynamics, risk factors, ad society's response (233613) Retrieved from
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  8. MetLife 2009.
  9. Wasik, J. (2000). The fleecing of American's elderly. Consumers Digest, (March/April), 77-83.
  10. Beach, S. R., Schultz, R., Castle, N. G., & Rosen, J. Financial exploitation and psychological mistreatment among older abuse: differences between African Americans and Non-Americans in a population-based survey. The Gerontologist, 10(2003), 53-69.
  11. Protecting senior investors: Compliance, Supervisory and Other Practices Used By Financial Services Firms in Serving Senior Investors, (2008, September 22). Retrieved from
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  13. Nolan, J. (2011, September 06). Cuccinelli Adds Resources to Crack Down on Medicaid Fraud. Richmond Times Dispatch. Retrieved from
  14. Elder Financial Protection Network. (2011). Retrieved from
  15. A Citizen's Guide to Preventing & Reporting Elder Abuse. (2002). Retrieved from
  16. Protecting Seniors and Their Life Savings: Policies and Practices of Missouri's Investment Firms, 2010. Retrieved from
  17. Sawicki, T.J. Szuch, R. C., Sherman, S. N. & Reed, A. (2007, September). When the baby boom era becomes the retirement explosion. Retrieved from

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