How to detect and prevent elder financial abuse

It’s been said that a business deal is a meeting of the hearts. Trust is everything and the lack of it is rust. An older business client of mine a few years ago ran a road construction crew. It’s a good business, but in his case, it was quite difficult to retain a good crew. The remote working area, the challenging work and the sorts of (mostly) men who are attracted to these conditions meant for some oddities, usually on payday.

Some of his men required help cashing their pay cheques, such as the guy with no ID who called himself a “citizen of the Earth.”

It was a tricky job providing an exception to the standard ID procedures so he could get himself groceries on payday.

This sort of thing wouldn’t work under the current hurdles designed to protect us from terrorism and money laundering, but back then, my trusting client also hired a destitute young lady with no ID. She was headed into the bank, not on payday, but to pick up some cash he needed for the business. He phoned and told me to identify her by the distinctive tattoo on her left shoulder, and to let her take the funds.

I walked from my office to the bank lineup and introduced myself. The teller was waiting for me to sign off on the exception so the mysterious gal could cash a company cheque – a few hundred dollars.

As arranged, she took off her coat and pulled back the shoulder area of her clothing, (making me extremely nervous). On confirming that she indeed was the girl with the corned beef sandwich tattoo, I allowed her to walk away with the cash, feeling sort of proud that only I could authorize such a unique service for my client.

When I got back to my office, not a minute later, the phone was ringing.

“Change of plans!” shouted my client on the other end. “She stole my petty cash and she’s gonna run. Don’t give her a nickel!”

I sprinted out of the branch but she had vanished – probably into an air duct. That’s always where they go.

It’s heartbreaking, but the recipe is evident:

• Older people tend to have more savings.

• Younger people less so, but are under intense pressure to make ends meet.

• Older people lose some basic cognitive skills, and are often lonely and trusting.

• Some people are bad.

It follows that some young people will (and do) take advantage of their elderly relatives or acquaintances. And it’s disgusting.

Some types of elder abuse:

• Although some people assume they are just forgetful, experts say missing valuables is a common sign of abuse. Often, seniors will notice this themselves, and may mention it to an advisor or family member.

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Banking activities tend to follow normal patterns, and so a sudden change can be a red flag. Unfa-

Missing valuables: Unusual banking activity:

miliar third-party bill payments through an account or requests to make payments on someone else’s credit card can be a sign. There could be a good reason for the activity, but it could be a sign that someone is pressuring the senior nefariously.

• A challenge in spotting abuse is that it often occurs in a grey area. It is difficult to judge the sudden appearance of a new friend or romantic interest, and whether it suggests potential abuse or is a legitimate relationship.

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Sudden new companion: Unexplained property transfers:

Transferring property or bank account ownership should be seen as a major red flag. There have been cases where an elderly person has been convinced either to sign over the entire title to their house or perhaps to make it joint with an abuser, meaning the abuser would get it on the person’s death.

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Unexplained changes to will or power of attorney:

Financial power of attorney allows a designated person to act on behalf of the client in legal and financial affairs. It’s a very significant designation and any changes to it, particularly when the transfer is not to a family member or a longstanding friend, could be a sign someone may be trying to take advantage.

• Determining whether a family member’s requests for financial assistance constitute abuse or a legitimate appeal for help is fraught with challenges.

Fuzzy family finances: How to prevent abuse

Have a wealth transfer plan in place and communicate it to the next generation or other beneficiaries. It might be counterintuitive to share financial information, and shouldn’t be done lightly, but having a select few trusted eyes on the file is best.

Ensure that your power of attorney is chosen wisely, whether it be a family member, friend or lawyer. This should be someone who lives nearby, is reliable and stable financially.

Have a network of professionals (financial advisor, accountant, lawyer, etc.) as a first point of contact for family members who are concerned about potential abuse. Again, more eyes – in this case, professional, and regulated. Darkness flees in the light.

Fraudsters tend to skulk around looking for low hanging fruit. But if you’ve got all your affairs in order, and you’ve got a team of professionals and trusted family who know what’s going on, you’re not easy pickings.

Mark Ryan is an investment advisor with RBC Dominion Securities Inc. (Member – Canadian Investor Protection Fund), and these are Ryan’s views, and not those of RBC Dominion Securities. This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. Mark can be reached at mark. ryan@rbc.com.