Financial entitlement is one domain of financial exploitation. In 2010, Conrad and colleagues defined financial entitlement as: “a belief held primarily by adult children that they can take their older parent(s)’ money to spend on themselves without permission. Although some adult children argue that the money is their inheritance and thus already earmarked for them, using an older person’s money without permission is exploitation.”
In my experience there is a chilling effect of financial entitlement. When older adults are asked if they discuss their financial arrangements or plans with their adult children, the majority tell me “no, if I raise the issue of money, my children may want it.” Money thus becomes a difficult conversation for older adults and their adult children to have and yet, now more than ever, older adults and their adult children need to discuss finances and make plans for safeguarding the older adult’s money. Indeed, the conversation should often focus on the plans older adults make with their financial services industry professional.
Despite research showing that financial exploitation (including thefts and scams, abuse of trust, and coercion) of older adults has been increasing dramatically – a 22% increase over four years – very few professionals believe they should involve themselves in the older adults’ financial affairs. Even when they suspect exploitation is occurring.
We are urging banks, financial planners, CPAs, and attorneys, among others, to begin a proactive planning process with all of their older clients in order that the proper support from family members and/or professionals can be activated when needed. Financial services industry personnel are increasingly being trained to recognize cognitive impairment or psychological vulnerability, but those skills must be paired with a good planning process before a crisis exists so that the older adult can choose who to involve should their financial capacity deteriorate. This is why we created and tested a new tool to help industry professionals screen for financial decision making abilities and/or deficits.
Using decision making abilities framework described first by Appelabuam and Grisso nearly three decades ago, our screening tool requires the older adult to be able to communicate the financial decision/transaction they wish to make; to demonstrate a rudimentary understanding of that decision and the nature and effect of the decision (appreciation); as well as describe their reasoning for the decision. This 10 item multiple choice rating scale also assesses whether the decision is an autonomous one, and makes use of the interviewing professional’s knowledge and expertise. To date, over 225 screening scales have been administered by professionals and the data regarding reliability and validity have been impressive.
Enhancing communication and planning around older adults’ finances will remain a chief priority as the greatest wealth transfer in our nation’s history continues to evolve. Proper planning and detection of financial decision making deficits will go a long way to preventing some of the worst financial exploitation we are currently witnessing.
Featured Image Credit: Newspaper read inform park by htraue. Public Domain via Pixabay.