It is common knowledge that the elderly are most at risk for financial scams and abuse.  Families often forget, however, that sometimes the biggest financial threat to elders is actually their own decreasing financial acuity and competency.  In addition to the aging factor, many elderly persons (although certainly not all, or even the majority of elders) do not have a great deal of financial literacy to begin with, when considering the increasing complexity of today’s investment and financial systems.

Last week, Anne Tergesen of MarketWatch.com commented on a recent story by the Wall Street Journal, and provided a few tips for families who are worried about elders who may be at risk for financial abuse or simply at risk for falling behind in keeping track of their financial health.

In Tergesen’s article, she acknowledges the basic fact (that most families are already aware of) that elders often have trouble keeping track of their financials due to the natural aging process, but she also introduces a new program that is aimed at seeking out cognitive changes in elders early on, to prevent financial issues in the future.

Click the image below to read Tergesen’s article on MarketWatch.com:

This program (which is sponsored by the Investor Protection Trust) is called the Elder Investment Fraud and Financial Exploitation Program (EIFFE).  The program is a partnership between the Trust, the American Bar Association’s Commission on Law and Aging, and more than three thousand specially trained physicians around the country.  The Trust is providing these professionals (attorneys and doctors) with resources to help elders and their families detect and prevent abuse, fraud, and general financial trouble within the elderly population.

The program provides these professionals with steps to take to detect cognitive impairment (such as questions to ask and behavioral signs to be aware of), and resources to be able to refer their clients and patients to family members, state and local agencies, geriatric care managers, and other professionals to prevent financial missteps and abuse.

These programs are currently being implemented in selected states, but the Trust is aiming at making these resources available to professionals nationwide in the very near future.  Professionals such as doctors and attorneys are well placed to be able to detect possible cognitive issues and help elders and families to prevent possible problems for the future, and these new resources will likely prove to help more elderly persons get help sooner and avoid irreparable financial abuse and neglect.

In December, US News columnist Kate Stalter published an article that covered some of the most frustrating aspects of helping to manage an aging parent or relative’s investments.  She also gave some helpful tips for family members (usually adult children) who are trying to help avoid elder abuse and fraud or simply to avoid financial missteps for their aging relatives.

As I may have mentioned before, seniors who are currently in their 70s to 90s (often called the “Greatest Generation” or the “G.I. Generation”) tend to value their independence and autonomy above other values.  This can make discussions about finance a touchy subject.  Stalter makes an interesting point about how to approach these discussions: don’t have the discussion in your parent’s home.  She mentions that the kitchen table (for example) of the family home, while comfortable, symbolizes the parent-child role, and it is where “they [the parents] are in charge.”  A more neutral environment might be the best place to have this discussion with your family.

Stalter cited an ongoing study by Daniel Marson of the University of Alabama at Birmingham (funded by the National Endowment for Financial Education) which noted that there were generally a few very specific warning signs that financial cognitive trouble might be occurring for older adults.  These warning signs included problems with everyday arithmetic and difficulty identifying risks in investment opportunities.

Interestingly, seniors also may become overconfident about their control of their finances as they age.  Not only do seniors tend to want to handle their finances all on their own, they may also overestimate their ability to navigate their investments and banking decisions as they get older.

Every senior is different, and some people might need help early on (even as early as in their 50s) while others might be able to handle their own finances well into their 80s or beyond.  Stalter encouraged families to work together with their parents and aging relatives by sharing financial info so that errors, possible outside financial abuse, and missteps could be caught quickly or avoided altogether.

Although Stalter suggested that parents and children share the parents’ financial info via online apps such as Mint or eMoney Advisor, these systems might be somewhat difficult for elderly persons to navigate if needed.   A better idea might be to start with sharing paper copies of account statements or summaries of financial accounts.  This would create a good starting point for parents and their children to help manage investments and financial decisions together.

However you help your parents, it is important to know that without guidance, many seniors do not have the ability to see that their financial competency is declining.  Broaching this subject may take patience or repeated attempts to convince your parents that they are ready for help, but it is much better to become comfortable with these discussions before financial troubles are already at hand.

Click the image below to read Stalter’s article directly at US News & World Report on usnews.com:

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