Ageing brings the curse of vulnerability. Cognition inevitably declines, reflexes inevitably decline, eyesight and hearing inevitably decline, while muscle mass is on slow glide downward as we lose 3-5% each decade from our 30’s. That means strength and balance inevitably declines. There are some preventative measures we can take, but try as we may, in some areas we may be struck randomly by age-related disease and decline regardless.
If you think that’s negative, we’re not finished yet.
Vulnerability increases risk. There may be a need to outsource more tasks and rely on others for help. Worse, some may see an elderly person in a diminished state as someone to be taken advantage of. Nefarious types are everywhere The best defence? We’d like to say it’s a trusted professional partner. Occasionally someone may place their trust in the wrong professional.
Advisers, lawyers, accountants, caregivers, cleaners and various other service providers have all been caught exploiting the elderly. These cases attract the most attention because they are the most likely to be prosecuted, but elder abuse is overwhelmingly likely to occur in a family or domestic setting.
The 2016 Victorian Royal Commission into Family Violence heard that 92% of elder abuse is carried out by adult children. Studies based on elder abuse call lines are a little broader. Again, adult children are the largest groups of perpetrators (31% sons, 29% daughters). 10% came from other relatives, 9% of abuse was from a spouse/partner, while 21% came from a combined category of neighbours, friends, workers, and informal carers.
These variances may be explained by different categorisations. What is clear is that family overwhelmingly makes up the largest group perpetrating elder abuse. And according to many sources, elder abuse is more likely to be financial abuse. This is the big lure. The money. It is tough to get a handle on the figures lost, scammed or stolen. In the US, estimates vary. A Metlife study early last decade suggests $2.9 billion a year but admits it’s likely higher. True Link Financial who cater to the vulnerable and elderly suggests it’s $36 billion a year.
Why are the elderly exploited like this for materialism?
We’ll put on our sociologist hat and take a shot. Unlike other societies, and in contrast to the way many humans may have lived historically, our society isn’t one where generations live together. Without that ongoing and everyday contact, someone’s needs and function as a human being can be glossed over. This unfortunately can lead to the terrible habit of depersonalising someone and dismissing their needs.
There is also paternalism. Our society diminishes the elderly. A person’s family may think they know what’s best. Better than the person themselves. It’s easy to see where it might start. A very valid concern over health or diet may creep into attempting to swoop in and police other areas. Controlling affairs can follow. This may not lead to financial abuse, but it can be abusive.
The family member doing the policing may not be the person committing financial abuse, but if they create an environment of paternalism, the abused party may find themselves unable to volunteer themselves as a victim. We know that seniors are often the target of scams. If they don’t feel they have the ability to approach someone without being scalded or lectured, any abuse may essentially go undetected for a lengthy period.
Abuse may come in many forms. It may not even be spending the money. An elderly client might be terrorised by an offspring over their advised portfolio. The offspring is already viewing the portfolio as their money and thinks they know how it should be invested. Worse, this may be prompted by a know-it-all DIY expert. Gold or bitcoin types. Market crash or economic calamity people. These groups are strident in their beliefs and can be notoriously vocal.
We think the best solution is advice and working with a professional. There is the opportunity for generational planning and having the family on the same page and understanding motivations, requirements, and investment philosophy. Absent such inclusiveness, one of the most obvious things an adviser can do is being alert about changes in withdrawals. Just as an adviser can be the firebreak between poor decisions during a temporary market plunge, they can be counsel between poor gifting decisions or potential abuse.
If someone is having trouble dealing with a demanding family member, they may not feel they have the strength to bring the person to account. Simply because they don’t know how or don’t have the heart to say no. An adviser should be happy to take a call and set a recalcitrant family member straight over the issue. Unless it is dealt with, and under control, it will become a major stressor mentally and financially.
Finally, we will end on a positive note. A Queensland Administrative Tribunal hearing in 2017 highlighted that families can interact sensibly around money and do want transparency. The daughter of an elderly lady was appointed administrator of her mother’s financial affairs. It was ruled the 94-year-old no longer had the capacity for handling her own financial decisions.
When in full capacity, the lady had regularly made numerous monetary gifts to family members totalling large sums of money. She was of considerable wealth and the practice of giving to her children, grandchildren and great-grandchildren brought her great joy. The lady stated this was her ongoing intention, but she no longer had the capacity for this decision. Her daughter made an application to QCAT to continue the process on her behalf.
After evidence from her accountant, and a financial planner, the Tribunal ruled it was acceptable for the gift-giving process to continue. The gifting was consistent with her prior behaviour and the large sum of the monetary gifts would not have any significant impact on the lady’s financial circumstances.
If only it was always so clear cut.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs. With thanks to my colleagues at FYG Planners for this insight.