Dementia puts seniors at risk of financial abuse
Dallas – — Barbara Macari’s husband, Frank, always handled the investments in the family. Then one day, Frank, a real estate broker, gave his wife the shock of her life.
“I was coming down the stairs, and he came to me and said, ‘I don’t understand money anymore,’ ” Barbara said. “I was just shocked because this was something that he had always handled, and handled it beautifully. He made a lot of money on investments. He was smart, he was astute, he was careful, and all of a sudden, he didn’t understand anything.”
A couple of months later, Frank, 74, was diagnosed with Alzheimer’s disease.
“He can no longer write checks,” said Barbara, 72. “He doesn’t even carry money with him because he doesn’t understand it.”
The Macaris, who live in Dallas, are far from alone.
An estimated 5.1 million people age 65 and older have Alzheimer’s disease or other dementias that eat away their ability to manage their financial affairs. With 10,000 people turning 65 every day for the next decade and half, the number of seniors dealing with cognitive decline is expected to keep rising.
That means that seniors, with a median household net worth of $170,500, will be more vulnerable to financial exploitation, whether it’s a scam by crooks who prey on the elderly or theft by someone they trust.
“It’s a huge problem,” said Daniel Marson, professor of neurology at the University of Alabama at Birmingham. “It’s like a 2,000-pound elephant. Where do you start? Poor financial decision-making and financial exploitation, financial elder abuse are rampant.”
It’s easy to see why seniors are an easy mark for crooks.
“The seniors hold the majority of the wealth in this country,” said Lynne Egan, chairwoman of the Committee on Senior Issues & Diminished Capacity at the North American Securities Administrators Association. “They’ve saved up for retirement, they’ve got the 401(k) that they’ve rolled over into the qualified plan, they’ve sold a home to downsize, they’ve sold a business, they’ve inherited, and they’re ripe for the plucking by the con artists.”
In the financial realm, cognitive decline means a loss of “higher-order functional abilities” affecting a broad range of skills from counting coins to managing a checkbook, experts say.
Loss of those skills can have severe consequences for seniors, who lose $36.48 billion a year to financial abuse, according to a study by True Link Financial. Even that may be conservative.
“Since so much abuse is never uncovered, this is undoubtedly still a low estimate of the true cost,” said Kathleen Quinn, executive director of the National Adult Protective Services Association.
True Link, which provides financial tools to help protect older adults from being victimized, said seniors annually lose:
■$16.99 billion to financial exploitation, defined as when misleading or confusing language is used — often combined with pressure tactics that take advantage of cognitive decline and memory loss — to obtain a senior’s consent to take money.
■$12.76 billion to explicitly illegal activity, such as scams or identity theft.
■$6.6 billion “to deceit or theft enabled by a trusting relationship, typically a family member but sometimes a paid helper, friend, lawyer, accountant or financial manager.”
Mark and Kent Olds of Dallas said their 79-year-old mother, Gail, has dementia and was exploited by a caregiver who took about $7,500 from her.
“This lady took Mom to the credit union on two different occasions,” Mark said. “Mom gave this lady $6,000, $7,000 one time, a grand another. We noticed a few other things missing before we could put the stops on it.”
The financial losses of seniors aren’t limited to what others do to them. They often hurt themselves by being too trusting and generous.
“When my mother was about 65 years old, she began giving money to anyone who asked, including those who just knocked on the door,” said Tom Murphy, a Dallas certified financial planner. “She had always been a generous woman, but my father eventually realized something was wrong.”
His father, also named Tom, eventually took the family and business checkbooks away from his wife, who was later diagnosed with Alzheimer’s disease.
The deterioration in financial skills couldn’t come at a worse time for seniors, said Egan of the North American Securities Administrators Association.
“Our ability to make financial decisions starts to decline at about the time it becomes more important that we protect our nest egg because we don’t have time on our hands to earn back losses that may have occurred,” she said.
Because of the potential for financial exploitation of seniors, outside institutions including banks, health care providers, lawyers and financial advisers have developed policies and training to detect telltale signs.
Egan said bank employees can be the first line of defense against financial exploitation because they often get to know their elderly customers.
“They are the first hands on deck to see that something’s not right,” she said.
Glenda Coffman, a relationship banker at a Dallas-area Chase branch, proved Egan’s point when she saved an elderly customer from sending $30,000 to a would-be scammer.
The customer had approached the teller he usually deals with and asked to withdraw cash. Since the amount was larger than he normally took out, the teller referred him to Coffman.
“He said he needed to get some money to help out his grandson,” she said. “He wouldn’t give me too much information about the transaction, just that he wanted to help his grandson. I got him his money and he went on his way.”
He returned the next day and asked to withdraw more money, and the next — but this time he wanted to withdraw $30,000. That’s when the red flags really started waving.
Coffman questioned him again, and this time the customer was more forthcoming. He told her that his grandson had gotten into some trouble and that he needed to pay legal fees.
Coffman encouraged him to talk to his daughter — his grandson’s mother — but the man eventually withdrew $30,000 and left.
“I knew at that point — I absolutely knew — that something was definitely wrong,” Coffman said.
The next day, the customer’s daughter came to the bank and redeposited the $30,000. The grandson wasn’t in legal trouble after all.
“She was thankful that I had spoken with her father, and apparently he thought about what I said and called her,” Coffman said.
The Investor Protection Trust, a nonprofit investor education organization, works to educate doctors, nurses and other frontline medical professionals to recognize when their older clients may be vulnerable to or victims of financial abuse.
The organization supplies a pocket guide that suggests questions medical professionals should ask their elderly patients to determine financial capacity: Who manages your money daily? Do you run out of money at the end of the month? Do you regret or worry about financial decisions you’ve recently made?
The trust operates a similar program for lawyers.
Egan’s group, the North American Securities Administrators Association, has made expanding and strengthening protection for senior investors a top item on its congressional agenda. She said it’s sorely needed.
“We’ve got a population that’s aging over time, so we’re seeing a trajectory to a higher number as we move forward, as the baby boomers start to retire,” Egan said. “It takes a while to get good policies and procedures and laws in place. We need to act now before it’s too late.
“It takes a village of people to protect a senior.”
By the numbers
The number of Americans living with Alzheimer’s disease is growing — and growing fast.
■1 in 9 people age 65 and older (11 percent) has Alzheimer’s disease.
■Someone in the United States develops Alzheimer’s every 67 seconds. In 2050, someone in the U.S. will develop the disease every 33 seconds.
■Alzheimer’s disease is the sixth leading cause of death in the U.S. and the fifth leading cause of death for those age 65 and older.
Where to get help
■The Financial Industry Regulatory Authority: The regulatory body of the securities industry has a toll-free help line for senior investors. Call 844-574-3577
■The North American Securities Administrators Association: The association‘s Senior Investor Resource Center provides tools to help senior investors protect themselves from investment fraud. www.nasaa.org/1723/senior-investor-resource-center
■The Consumer Financial Protection Bureau: The CFPB offers a wealth of information and resources for seniors. www.consumerfinance.gov/older-americans
Sources: Alzheimer’s Association, Dallas Morning News research