How to recognize financial decline in seniors—and help prevent financial abuse.
Financial abuse can happen to anyone. As we age and become more dependent on others, however, we can become more vulnerable to influence and pressure. This can lead to a situation of financial abuse or exploitation. The risk is even higher for those who suffer from some form of cognitive impairment (such as Alzheimer’s or dementia) as they may be significantly more dependent on others.
A serious financial loss is often devastating as senior victims of financial abuse struggle to regain their financial stability. Financial fraud and abuse can cause more than just money problems; victims lose trust in others, can become socially isolated, and show signs of health problems such as depression and anxiety.
According to Statistics Canada, New Brunswick is tied with Nova Scotia for having the highest percentage of seniors (19 per cent) in Canada. So it’s important that New Brunswick seniors prepare for a firm financial future, learn to recognize the signs of financial abuse, and know how to seek help when financial abuse is discovered.
What financial abuse of seniors can look like
Financial abuse is any act involving the misuse or abuse of funds or assets. It can include outright theft, abuse of power of attorney privileges, misuse of a senior’s finances, and targeting seniors to invest in unsuitable or fraudulent investment products. Common forms of abuse include:
• Forcing someone to sign over power of attorney or control of their assets.
• Forcing someone to sell their house or change their written will.
• Depleting savings without the account holder’s knowledge.
• Spending savings for items that do not benefit the account owner.
• Withholding someone’s funds, pension cheque or other income.
Investment fraud, in particular, is common among seniors
New Brunswickers who are exposed to investment fraud are most commonly approached by telephone, email, or through a friend, family member, or co-worker. Signs of investment fraud include:
• Being approached out of the blue with a “great investment opportunity.”
• Being promised a high or guaranteed return on a low-risk investment.
• Feeling pressure to act quickly.
• Negative reaction from the person selling the investment when asking questions or delaying a response.
Seniors can take steps to protect themselves from financial fraud by hanging up the phone on unsolicited offers, and ignoring any inquiry into their finances or offer of investment opportunities from a stranger.
Note that it’s not always malicious
Being thrust into the role of primary caregiver for someone you love can come with a deluge of emotions and responsibilities. This can be overwhelming to say the least. A lack of knowledge around financial matters or responsibilities, or the absence of a care giver support system can lead to improper handling of financial matters. Don’t be afraid to ask for help from a financial professional. Our personal money management resources may help. Sandwich Generation – Are you stuck in the middle? provides a quick checklist for things to consider.
Signs of financial abuse or financial exploitation
If you notice any of the following behaviours in a loved one, he or she may already be a victim of financial exploitation.
• Someone that you may not know or trust asking for access to your loved one’s bank accounts or to be your loved one’s power of attorney.
• Your loved one feeling pressure to give money when they know they should not.
• Your loved one not fully understanding where their money is going or experiencing unusual banking transactions.
• Suddenly changing their will.
• Unusual fear of or sudden change in feelings about a particular person.
• Change in appearance or noticeably poor hygiene.
• Being accompanied by a caregiver who is overly protective.
• Change in ability to perform activities of daily living including self-care, daily finances, or medication management.
• Discrepancy between standard of living and financial assets.
Concerns about investment fraud can be reported to FCNB by calling 1 866 933-2222 or using our online form. Other forms of financial abuse should be reported to your local police or RCMP.
Signs of diminished capacity
When someone is struggling with diminished capacity, they’re more likely to fall victim to a financial fraud. The following are signs that they may be struggling with diminished capacity, and may need you to step in and lend a hand — before they experience financial decline.
• Lots of unopened mail.
• Taking longer than usual to complete everyday financial tasks, like paying bills.
• Paying the same bill multiple times and not paying others.
• Decline in math skills, like figuring out the tax on an item.
• Decreased understanding of financial concepts, like interest rates.
• Uncharacteristic purchases.
• Changes in their investment portfolio that are not aligned with their risk tolerance.
• General unkemptness of the house, especially if they are typically neat people.
• Making repeated calls to their banks because they forget their PIN number.
Our Money Talks: Financial Abuse brochure can help start a conversation about financial matters that may be concerning you.
How to help protect seniors in your life
You may have a parent or other loved one with diminished financial capacity, or who you worry may face that issue in the future. If so, consider the following steps to help.
• Have an open conversation about investments and other financial matters sooner rather than later.
• Help your relative or friend with managing finances, if they request and consent to you helping.
• If your family member or friend has named you to manage money or property, understand your responsibilities and how you can protect your loved one from financial exploitation. FCNB has a brochure specifically for people who are acting as a power of attorney. Download your free copy here.
How to have a difficult talk about finances with your aging parents
Broaching how to safely handle money with your aging parents isn’t the easiest conversation to have. Many seniors are uncomfortable talking about their financial situation. By disclosing their finances, they may feel they are losing control over their lives. Unfortunately, many grown children avoid the conversation — until it’s too late.
Try raising the topic when the entire family is gathered together to celebrate a holiday. It ensures everyone in the immediate family is on the same page when it comes to their parents’ finances. A non-confrontational way to raise the topic is by turning it into them helping you: if something went wrong, you would be at a loss to know how to help them.
During the family meeting, ask the following questions, and cover the following topics:
• Do you have a will, trust or other legal document in place and is it current? If personal circumstances have changed since it was originally drafted, like a beneficiary has died, should it be revisited?
• Have you given someone power of attorney (POA)? If not, then consider it. A POA is a legal document that lets a person choose who they want to manage their affairs if they become unable to do so.
• Have you thought about giving your financial planner authorization to contact a preselected and appointed, authorized emergency person — like a son or daughter — should the financial planner suspect diminished capacity?
• Do you have a health-care directive? This is a document where you can communicate what you would like to have happen should you become ill and unable to communicate your wishes.
• Discuss common scams that target seniors. It will help your parents identify, report, and protect themselves against financial abuse. Website resources, like those at FCNB.ca, can provide information on common scams and frauds that New Brunswickers face.
• For more vulnerable individuals, consider offering to regularly review their bank statements with them.
• Listen for names of new friends that always seem to appear in their conversations. Isolation is a big contributing factor to senior financial abuse and some scam artists will prey on it.
• Establish a family code word. That way, when your parents get a phone call from someone posing as a grandson and asking for a $10,000 loan, they can ask for the code word to verify their identity.
How to protect yourself as you age
If you aren’t now, you will likely eventually be a senior yourself! Taking the steps listed below now may help avoid or minimize problems for you and your family as you age — and potentially find yourself with diminished capacity.
• Organize your important documents. Download our Record Keeper to help you.
• Provide your financial professionals with trusted emergency contacts.
• Consider appointing an enduring (or durable) power of attorney and drafting a will as part of an estate plan. (For a power of attorney dealing with financial or property matters to continue to be effective if you lose your mental capacity to manage your own affairs, it must be created as an enduring power of attorney. This is also referred to as a durable power of attorney.)
• Keep things up to date and review periodically to be sure your plans still reflect your current situation.
You can do this!
Managing your finances safely and responsibly can be difficult at the best of times. And even young financially literate people can fall victim to financial frauds. Unfortunately, it’s not uncommon for us to experience some sort of decline in financial awareness and health as we age. Hopefully this guide can help you prepare for a safe financial future.