Business forum: Elder abuse is a growing concern for us all
- Article by: WALTER WHITE
- August 25, 2013 - 1:22 PM
Nearly all of us have heard a version of this story:
A stranger contacts an elderly friend or loved one by phone or a knock on the door and asks them to make a significant financial decision, offering fraudulent assurances that the senior will either make more money or receive some other benefit by taking action. Or more commonly, a family member manipulates the senior into moving money or taking risks that serve only to benefit the family member.
Sadly, some older adults are vulnerable to this type of financial exploitation. For the fortunate ones, an intervention by a trusted family member may stop a bad situation before it is too late. But all too often, the trusting senior falls victim to the growing problem of elder financial abuse.
As baby boomers age and the senior segment grows, the potential for elder financial abuse will increase. The nonprofit Elder Financial Protection Network says that at least one in 10 elders is exploited. That alarming statistic may be understated as some seniors are too embarrassed to admit that they have been victimized.
Minnesota Department of Commerce Commissioner Mike Rothman has rightly made prevention of elder financial abuse a key priority. Noting the importance of awareness and education, Rothman recently stressed that his department is dedicated to helping seniors “protect themselves and stop fraud and abuse.”
We in the financial services industry also have a role to play in combating elder financial abuse. One way is through the review and assessment of new business that comes through the door.
In the annuities business, robust suitability standards — the rules that confirm that the product an independent financial professional recommends is suitable to that customer’s needs — mutually benefit insurers and consumers. They act as important checks to help protect seniors and all clients, leading to a more positive customer experience.
Dating back to 2005, Allianz Life implemented suitability programs nationwide. We took steps in 2007 to create even stronger suitability practices after hiring a former regulator as our chief suitability officer, a first for the industry.
We also implemented a 75+ Calls Program, through which we call consumers age 75 or older to confirm their understanding of key features of our fixed-index annuity contracts before the contract is issued. If clarification is needed, we require an agent-client conference call to resolve any misunderstandings. These measures help identify red flags that prompt appropriate action and reduce the chance for confusion.
Plus, a new industry-supported Minnesota law went into effect on June 1 that toughens suitability standards to protect all Minnesota citizens. Included is mandatory agent training (taking effect in 2014) on how to recognize indicators that a potential purchaser may lack the short-term memory or judgment to buy a product.
The financial industry is becoming attuned to this issue. Even before the law was passed, some financial firms such as Allianz have been offering training to agents to help identify potential diminished capacity or financial abuse. We also act as a resource to address difficult situations.
According to the AARP Public Policy Institute, financial capacity is one of the first abilities to decline as cognitive impairment develops. Yet seniors and their families may be unaware of this decline.
As an industry, a holistic approach to raising awareness should also include education for corporate home office employees. Beginning in 2009, the Alzheimer’s Association of Minnesota-North Dakota became a strategic partner to educate our employees about aging and cognitive impairment. Through regular presentations at company meetings, staff members build their knowledge about these important issues.
Our partnership goes two ways. Over the past four years, the Alzheimer’s Association has received more than $500,000 raised from our annual Driving to Donate employee charity golf tournament. Together, we’re building better recognition about aging issues and exploring new ways to educate the industry in the future.
Within this decade, there will be more Minnesotans over age 65 than children enrolled in our public schools. Before that phone call or knock on the door happens to you or your elderly family member, it’s worth studying up on elder financial abuse. Have that conversation with loved ones. Engage family members about the risks. Report any fraud by a stranger or a family member to the Department of Commerce and be prepared to fight back. Elder financial abuse will only be countered through awareness, preparation and informed action.
About the author: Walter White is president and CEO of Allianz Life Insurance Co. of North America, based in Golden Valley.
© 2013 Star Tribune