Marguerite DeLiema and Martha Deevy
WP2016-18
Elder financial exploitation, including scams that target seniors and financial abuse by friends and family, is a growing problem facing older Americans. At its core, financial exploitation involves a transfer of funds from a victim to a perpetrator, and as the nodes from which this money leaves the client’s hands, financial service firms are positioned to stop financial exploitation at its source. They may be first to notice declines in their clients’ decision-making capacity and to observe losses from their bank or investment accounts. In this chapter, we present innovative ways that wealth advisory firms and retail banks are addressing the problem. We interview representatives at small and large firms to learn about their financial exploitation training and prevention programs, their detection and response protocols, and how they balance the goals of client protection with privacy and the client’s right to autonomy in financial decision-making. We also interview representatives from financial service regulatory agencies to describe what interventions firms are authorized to do to when they suspect elder financial exploitation, the legal barriers they face, and recent rule change proposals that may overcome some of these barriers. By identifying suspicious activity early, halting fraudulent transactions, involving social services and law enforcement agencies, and alerting the client’s friends or family members, financial service firms can minimize the risk of elder fraud and financial abuse.