Financial advisors may need to be more involved in the financial lives of their elderly clients, as financial fraud at the banking level has soared over the past few years, according to news reports.
In 2018, American banks reported 24,454 cases of suspected financial abuse of elderly clients to the Treasury Department, according to government data cited by the Wall Street Journal. That’s double the number of cases just five years ago, the paper writes. And it’s a 12% rise from the number of cases reported in 2017, the paper notes.
Financial advice industry regulators have already taken steps to address elder abuse. The SEC approved a Finra proposal in 2017 to shield financial firms from liability when reporting potential fraud and require them to “make reasonable efforts” to obtain a trusted person’s contact information for accounts of elderly clients. But advisors may have to do far more, as older Americans are getting increasingly scammed through their bank accounts, according to the Journal.
Fraudsters often prey on grandparents’ attachment to their family, through what’s known as “grandchild scams,” such as requesting money transfers to assist or bail out a grandchild involved in an automobile accident, the paper writes. Seniors are increasingly vulnerable because of their adoption of social media, bankers say, according to the Journal. Furthermore, they’re more likely to be targeted because they still have their home numbers listed in phonebooks, the paper writes.
“They might be lonely. They are willing to talk while most of us just have a cellphone or screen out calls,” Laurel Sykes, senior vice president for Montecito Bank & Trust in California, tells the Journal.
In May, the federal government enacted the Senior Safe Act, which lets bank employees alert the police and adult protective services about suspected elder abuse, the paper writes. Tennessee and Texas, meanwhile, have gone a step further, permitting bank employees to delay or even refuse suspicious transaction requests or contact family members, according to the Journal. Certain banks are also stepping up protective measures, training employees on detecting and reporting suspicious activity in a way that wouldn’t violate their clients’ privacy, the paper writes. Some banks are also training their employees to detect signs of cognitive decline, according to the Journal.
But financial institutions may need to go further to prevent financial abuse of older Americans, as the number of cases is rising, the paper writes. Coastal Credit Union in North Carolina, for example, now submits one case of suspected elder abuse to the Treasury Department monthly — compared to just one or two per year a decade ago, Arlene Babwah, vice president in charge of risk management, tells the Journal.