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Wall Street Journal Report: Financial Institutions are Monitoring Older Customers to Detect Cognitive Decline

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If you have an older loved one in your life who is still managing his or her own finances, you’re probably on the lookout constantly for any signs that he or she is “starting to slip” – in other words, that they are suffering from cognitive impairment. If this concern is causing you stress, it might reassure you to know that you may have an ally who is watching out for the same thing: your loved one’s bank.

Are Older Customers Growing Careless About Money?

This article just published in the Wall Street Journal explains that major financial institutions, in an effort to curb fraud against seniors, have started to keep a watchful eye on their older customers. However, this well-meaning vigilance creates a dilemma – if a bank suspects that a client is beginning to grow careless with his or her finances, what then?  As reporter Lisa Ward writes in the Wall Street Journal, “Banks, brokerage firms and other financial institutions are starting to monitor older customers for mental capacity and susceptibility to fraud. But then the question is this: Once a financial institution suspects that a customer is becoming cognitively impaired or increasingly at risk of fraud, what does it do with this information?”

We’ve known for a long time that financial exploitation of seniors is seriously underreported. An analysis by the Securities and Exchange Commission released earlier this year pegged the number of seniors who had been the victim of this type of fraud or financial abuse at just under 7 percent over the past 12 months,  but that figure seems low. According to the AARP, about 90 percent of financial exploitation of seniors is perpetrated by family members or others close to the victim, and only a tiny percentage of cases – less than 3 percent – ever come to the attention of law enforcement. With billions of dollars at stake, not to mention the health and well-being of the seniors they serve, it’s no wonder that financial firms are growing more vigilant.

Monitoring Older Customers for “Alarm Bells”

The Wall Street Journal article mentions a few of the alarm bells that banks are beginning to heed. “Missed payments, duplicate checks and confusion about balances can be the earliest signs that a customer is in cognitive decline, and thus at greater risk,” the article says. “Some financial institutions are beginning to share their misgivings with family members and government officials when they see warning signs.”  Many financial institutions used to think that privacy laws made it illegal to observe and report on their concerns about older clients unless there were suspicions of criminal activity. But a new federal regulation which took effect in May 2018 protects these financial firms from being sued if they tip off government agencies about their concerns that a client might be a victim of – or susceptible to – financial exploitation.

Technology may be making the monitoring process a bit easier, says the Journal. “Some companies are beefing up efforts to detect trouble spots [with customer accounts]. For example, with more computing power and software driven by artificial intelligence, banks now can monitor vast amounts of data and account activity that may reveal cognitive declines, or signs that a customer may be a victim of criminal activity, such as uncharacteristic withdrawals or ATM transactions in the middle of the night.” This may sound like Big Brother, but it’s for a good cause, we think, if seniors are better protected.

Banks Not Required to Report Their Concerns

But that still raises the question for the banks about what to do with the information they gather. Do they contact law enforcement? Do they bring in agencies like Adult Protective Services if they suspect financial exploitation of a senior customer? Right now, the same rules that permit banks to watch out for their customers’ behavior don’t require them to report patterns that may seem suspicious. As one Federal Reserve official told the Wall Street Journal, “Reporting obligations vary by state and can be murky.” Financial institutions are also bound by state law: for example, at least a dozen states “allow investment advisory firms to place temporary holds on requests to disperse funds if financial exploitation is suspected. But there is no requirement to do so,” the article says.

Besides, banks find themselves in what the Journal calls “a delicate balancing act” because they are required to follow their client’s instructions. As one researcher put it, “Clients have a right to make poor financial decisions.”

A Careful Plan and a Family Conference

Here at AgingOptions we think this issue – the danger that a child, grandchild or trusted caregiver might financially exploit a vulnerable senior – demands careful planning, including a family conference in which all the roles and expectations regarding the care of mom or dad are clearly spelled out. There are precautions you need to take to protect yourself and your assets, including giving multiple people permission to view your accounts (but not access your money) as a safeguard against fraudulent behavior. We urge you to contact us so we can review some of these safeguards with you.

Remember, too, that there’s much more to retirement planning than finances. A truly comprehensive plan for your retirement future also needs to help ensure that you’re making the right housing choices, that you and your estate are well-protected legally, that you have the right kind of medical insurance, and that your family is supportive of your desires as you age. The only retirement planning tool we know of that does all this is a LifePlan from AgingOptions, and if you’ll invest just a little bit of your time Rajiv Nagaich will gladly show you the power of this retirement planning breakthrough. Come join Rajiv at a free LifePlanning seminar at a location and time that works for you. You’ll find a complete calendar of currently-scheduled seminars on our Live Events page, where you can register for the LifePlanning Seminar of your choice. Age on!

(originally reported at

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