In September 2018, Forbes reported that elder financial abuse would only get worse as Americans age. With 10,000 people turning age 65 every day for the next ten years, the demographics include a growing pool of potentially fragile people (retirees, elderly, widows, and widowers), many of whom based on age and circumstances are susceptible to financial exploitation.
While thieves and other criminal perpetrators are out there, the root of much elder financial abuse is our retirement system as it falls on individuals to accumulate and handle a large pot of money that is intended to last their lifetime. In a nation with $14.5 trillion in self-directed retirement accounts, that is a large target for financial predators. Bottom line: this retirement system invites financial abuse.
Financial Advisor Magazine reported that senior citizens lost at least hundreds of millions of dollars each year to fraud and various scams. Elder Financial Abuse: Frauds and scams targeting seniors are unlikely to go away any time soon. Yet, it’s a hidden crime because so many victims decide not to report it, and when they do so, many often choose not to prosecute.
Insurance and Financial Industry Help Hide Abuse
However, when it comes to trying to promote real changes that will offer some material protections, the investment, insurance, and financial services industries directly or indirectly push back complaining about the potential compliance costs and lobbying to maintain a status quo that is on a trajectory to only see a steady increase in elder financial exploitation.
Financial Advisor Magazine reported that senior citizens lost at least hundreds of millions of dollars each year to fraud and various scams. Elder Financial Abuse: Frauds and scams targeting seniors are unlikely to go away any time soon. Yet, it’s a hidden crime because so many victims decide not to report it, and when they do so, many often choose not to prosecute.
Helpful experts, including in some cases the industries themselves that are in part responsible for that abuse, provide plenty of useful tips – but this system inadvertently blames the victims. The do-it-yourself retirement system practically begs financial predation to occur.
Customer investors believe their professional financial advisors are fiduciaries, legally bound to act in their best interests. Sadly, that is not always the standard and not always the case. Many professional financial advisors are only required to adhere to a lower legal standard of behavior. They cannot outright tell you a lie, but they can make recommendations that do not place the customer investor’s interest first.
Elder Financial Abuse Is Growing
The Government Accountability Office found elder financial abuse to be a growing epidemic. Instead of being able to live out their golden years with a feeling of safety and financial security, the lack of financial safeguards are leaving an entire (and growing) demographic of older Americans on their own and often confused as to how the professional financial advisors they entrusted with their financial security are somehow allowed to make recommendations that are motivated by high commissions, self-interest, and those so-called professionals are not required by the law, rules, or regulations to place the customer investor’s interest first.
Theft and illegal behavior is one small part of the elder financial exploitation, a much larger part comes from abusive financial practices that run the gamut from higher fees and costs to complex and unsuitable advice and recommendations from professional financial advisors who are not fiduciaries and who often do not completely understand the products they are recommending to customer investors.
As the population ages and the assets held by that growing demographics continue to shift, the elder financial exploitation will continue to be an increasing problem.
