3 Rs to Prevent Elderly Financial Abuse: Red Flags, Relationships and Respect

Consider financial education comprehensively for National Financial Literacy Month

Recent lawsuits point to both the vulnerability of many older Americans to the scourge of online financial fraud and the opportunity that engaged financial services providers have to help thwart such pernicious crime.

Two such complaints are against a top 5 bank, which is accused of allowing two elderly women in California to lose more than $2 million to so-called “pig butchering scams.” Here, fraudsters posed as IRS agents to win the victims’ trust and trick them into multiple fraudulent transactions facilitated by the bank.

In another case, a top bank and credit union are accused of making 75 international transfers—74 of them alone through the credit union—by a retired naval officer totaling about $3.6 million. Unfortunately, many transfers were made even after concerns were explicitly reported to adult protective services in the officer’s home county.

The AARP says an estimated $28.3 billion is lost to what it calls elderly financial exploitation (EFE) each year in this country. Some 72% is lost to people the victims know, such as friends and family.

The emotional toll includes embarrassment and anguish and so much more, including, as in the California cases mentioned above, a person losing not only her life’s savings but also her home. Financial services providers are on the frontline in detecting and preventing this criminality, which targets the growing elderly population.

April is National Financial Literacy Month, and it can’t stop at teaching young children to save and spend their allowances wisely. We must consider financial education more holistically. So, what can a responsible, proactive bank, credit union, financial advisor, wealth manager or other financial services provider do?

Red Flags

First, make sure protocols to safeguard elderly clients are standard operating procedure. That begins with training staff to recognize red flags. Those can include unusual withdrawals or Not Sufficient Fund occurrences, newly added co-owners on accounts, or sudden investment decisions inconsistent with a client’s known objectives.

Indicators of the latter can include senior clients receiving excessive phone calls or visitors pushing dubious financial arrangements. Another indicator is a sudden change in beneficiaries and other terms in the consumer’s estate planning.

Relationship Building

Uncovering such situations requires an engaged relationship with the potential victims, combining a personal and digital touch. Financial services providers should initiate internal reviews and documentation when suspicion arises from unusual account activity. A best practice is assigning a dedicated team to investigate thoroughly. Potential steps include discussing concerns with the client privately, reviewing the legitimacy of transactions, and scrutinizing relationships with any new parties acting on the client’s behalf.

Again, that requires a trusted relationship with the member or customer and the determination to act. If your internal investigation uncovers likely malicious activity, cutting off access to the accounts and reporting your concerns to the appropriate authorities is imperative. State adult services, law enforcement and the Consumer Financial Protection Bureau all have protocols for EFE cases. Become part of the solution.

Respecting Privacy While Protecting Everyone

We stress again that it takes an engaged relationship with the older adult and their family to be in a position to discover elderly financial exploitation. And, the digital capabilities of OneDigitalTrust’s platform are designed to undertake the heavy lifting for financial advisors to be aware of certain estate planning-related actions or events that imply potential financial elder abuse, like taking advantage of probable incapacitation or undue influence.

OneDigitalTrust empowers financial services clients to safely digitize and share estate documents, impact analysis, account information, and powers of attorney with a pre-approved network of family members and trusted advisors, such as financial planners.

We need to add that while vigilance is essential, you must balance privacy and client preferences against protecting them and your own institution’s interests and liability.

Indeed, there can be a fine line between doing too little and doing too much, between inaction and overstepping institutional authority. Digital services facilitate transparency and shared access to respect that shifting, evolving line and comfort zone for you and your clients.

Indeed, OneDigitalTrust can be a critical component of the seamless collaboration between clients, family members, financial advisors and other legal and medical professionals, which results in the best decisions regarding elderly welfare and assets.

This heightened visibility also reduces exploitation opportunities while honoring client desires for privacy and autonomy. The OneDigitalTrust platform brings elderly individuals’ entire advisory team into a secure, unified digital space where abnormalities or suspicious activities become readily apparent.

Elderly financial exploitation will always be with us, but proactive identification and coordinated interventions can curb its effect on your clients and your institution. Staff training, documented and followed escalation procedures, aggressive reporting of suspected crimes, and selective account freezes can disrupt fraudsters and protect your most valuable assets: the people who entrust you with their money, dignity and financial independence. Make relationship building, recognizing red flags and reporting elderly financial exploitation part of your National Financial Literacy Month celebrations in April.

170M Americans need an estate plan. OneDigitalTrust offers a white-label, turnkey estate planning platform with pricing options tailored to the needs of individual credit unions and financial advisors.

Contact us today to learn more!


Break the Habit: Digital Estate Planning as an Essential Tool and Differentiator

The time and complexities involved in providing estate planning have long made it an outlier as a service. Investment advisors and wealth managers at traditional credit unions, banks, insurers and other financial services providers have been relegated to the sidelines as they refer their clients, customers and members to attorneys, as is the typical practice.

That practice, however, is changing as financial services continue to rapidly evolve in the digital world. Your organization will no longer have to pass your consumers—as well as the income they can generate—on to lawyers, keeping you from deepening those relationships.

Virtual estate planning platforms have been hard at work, developing their digital muscles, eradicating the need for attorneys, and even in-person servicing if an individual chooses. Empower your firm to break the habit of making third-party referrals and to deepen the personal touch and value they build with their clients, helping those they serve to navigate their financial lives and plan their legacies more holistically.

A Hybrid Advisor-Client Experience

“A streamlined digital estate planning platform delivered as a hybrid advisor-client experience provides a unique opportunity for advisors to expand their service model, amplify relationship alpha, power retention, and create advisory pathways to the next generation of clients,” a new report from Javelin Advisory Services reads.

Titled “Digital Estate Planning: A New Frontier for RIAs,” the think tank’s report focuses on the power of digitizing the creation and storage of relatively simple but vitally important documents such as wills, revocable trusts, and medical directives. It cites OneDigitalTrust as a leader in creating that new nexus of advancing fintech innovation and growing advisor value, as shown in the illustration below.

Javelin Research found OneDigitalTrust to provide advisors innovation and value.

The Relationship Alpha for The Next Aging Generation

Millennials have surpassed baby boomers as the largest generation in the United States. Those 20-somethings to 40-somethings are digital natives. They’re accustomed to living online – including working, shopping, learning, and banking – but they’re still real, live human beings, naturally, who can benefit from professional guidance and advice through their journeys.

Along with traditional matters such as raising families, forging and maintaining careers, caring for aging relatives, and the vicissitudes of aging, they also find themselves with their own unique set of stressors, as the Javelin report astutely illustrates in this figure below.

Platforms like OneDigitalTrust help to calm financial services providers clients' anxiety, Javelin found.

The “Demographics” section in the above figure includes “increased personal wealth,” among other factors that present an opportunity to RIAs and other financial services providers who can most seamlessly and effectively combine high-tech and high touch for this cohort of adult Americans.

As the report observes, all these factors imply that scaled delivery of personalized solutions points to demand for an enhanced user experience. Digital estate planning combined with direct conversations with clients about this particularly weighty topic helps cement that relationship with the client and potentially with the other stakeholders in the next generation, especially if they, too, join the discussions.

Ultimately, it’s about the effectiveness of advisor-client communication, a significant currency that makes financial advisors more than order-takers in a digital world of cookie-cutter, low- or no-cost options. That’s not a recipe for long-term success.

“The legacy [estate-planning] conversation is emotional, often covering philanthropic and generational aspirations,” the Javelin report observes. It points to this empowering feature in our platform: “OneDigitalTrust, for example, creates a client area where notes can be appended to the system, allowing the client to memorialize and express those aspirations and sentiments for advisors, kids and other beneficiaries.”

Differentiation and Commoditization

That vital communication feature – among others – helps OneDigitalTrust continue to push out the leading edge of humanizing digital estate planning and, most critically, the ability for advisors to differentiate themselves in the uber-competitive fintech world.

OneDigitalTrust, as the Javelin report observes, is also out front with integrating personal financial data into its platforms. That gives financial services providers the ability to wade through multi-party, multi-platform morass to add even more value.

Financial services providers are keenly aware of the commoditization of their products and services and the need to differentiate. A robust foundation for that is personal service that uses digital products to help leverage meaningful conversations around the unique access financial planners have to their clients’ assets.

That conversation should include how to distribute those assets when the time comes without sending that part of the business elsewhere. “Advisors must consider expanding their business model by leveraging digital estate planning solutions,” the Javelin report concludes. “New channels of dialogue are opened with beneficiaries and family members who can become clients and advocate for the advisor’s expertise.”

And that helps the advisor and their employer build their value and legacy.

170M Americans need an estate plan. OneDigitalTrust offers a white-label, turnkey estate planning platform with pricing options tailored to the needs of individual credit unions and financial advisors.

Contact us today to learn more!