America’s aging population faces financial concerns

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By Ann Cleven

Financial abuse is an issue on the rise among America’s aging population, as 10,000 Americans turn 65 each day, according to the Pew Research Center.

T. Ryan Wilson joined AARP’s Public Policy Institute in 2007, where he has taken on new initiatives to change economic policies that affect the growing population of older Americans.

As a senior policy adviser of the Economic and Security Division of AARP’s Public Policy Institute, Wilson has published reports that address financial issues the elderly face are of growing concern.  What makes this group so vulnerable to financial exploitation is that many aging people develop a diminished capacity, or impaired judgement.

“Diminished capacity is the biggest growing issue for people who care about older people,” Wilson said. “One of the abilities that ages out is a person’s ability to tell if someone is lying.”

Dementia and Alzheimer’s disease are two examples of diminished capacity. In Michigan alone, it is estimated that 240,000 people are living with some form of dementia, according to The Michigan Dementia Coalition.

One out of every ten seniors is a victim of elder abuse, according to The Elder Justice Roadmap. The incidence of abuse already occurs at high rates, and it is estimated that for every case of abuse that is reported, goes another 44 unreported, according to a report by the Weill Cornell Medical Center of Cornell and The New York City Department for Aging.

“It’s a problem that’s out there for everybody. It’s a societal problem. It’s a problem for firms that are trying to do the right things by their customers, a problem for regulators to get their hands on. It’s a problem for law enforcement,” Wilson said.

Because the aging population has so many people affected by diminished capacity, they are at risk of being taken advantage of when making financial decisions.

“One of the abilities that tends to age out is the ability to tell if someone is lying” Wilson said. “They’re stuck making complicated financial decisions, and yet they may not have the word with how to do it.”

In 2010 he completed an analysis on “senior designation titles” in a report which analyzed policies and regulations regarding the topic. Senior designation titles are certifications that financial advisers and other business professionals acquire to show their expertise in dealing with senior citizens.

“I compare it to sort of like a gateway drug” Wilson said. “It’s not the thing that causes the problem per say—having that designation. Having that designation in and of itself does not make it fraudulent.”

The concern with senior designation titles is that they often times do not require much or any training in order to achieve certification. According to Wilson’s research for AARP, a financial adviser can earn one of these titles with a self-administered exam or a short seminar.

It can be misleading to seniors who think they are conducting business with someone who is looking out for their best interest.

Though these designations require little effort, a survey by the Financial Industry on Regulatory Authority (FINRA) found that 46 percent of people who conducted business with senior designated advisers were more likely to take that adviser’s advice than if the adviser did not have a title.

“If somebody is trying to mislead people and just turn commissions for themselves for instance, if they’re commission salesmen, what they would get out of that is more people through the door,” Wilson said in reference to senior designation titles.  “It’s like low hanging fruit.  Regulators can fix this.”

As Wilson said, these titles are misleading and may not be abusive by themselves, but it opens the door for the aging population to be taken advantage of.

Twenty five percent of those surveyed by FINRA said they had conducted business with a salesperson with this title and as the aging population over 65 grows faster than in years past, the issue of financial exploitation raises concerns.

Currently Wilson is researching the legislative progress progress Uniform Power of Attorney Act and the Uniform Guardianship Act, which will make advancements towards these ends.

The Uniform Power of Attorney Act is passed at the state level and grants seniors with a diminished capacity the right to an attorney when dealing with property and finances. 19 states have passed this law since 2006.

The Uniform Guardianship Act is another piece of legislation that would benefit the aging population at risk of abuse. The law, adopted by 37 states, allows for someone with diminished capacity to have a legal guardian across state lines. If there is no cross state guardianship, facilities and courts don’t have a direct jurisdiction of where the guardianship is held, according to AARP.

The Uniform Guardianship Act plays a role in the lives of many seniors, as it is estimated that 1.5 million adults have a guardian that cares for them. The issue arises when a child moves out of state and a parent loses cognitive ability, and needs a guardian.

Another piece of legislation that is a priority for the AARP is the Older American Act and is currently on the floor of the senate. The act was originally passed in 1965, but its authorization expired in 2011.

Sections of the act were amended in 2014 when it came up for reauthorization, such as section 1562, which was granted funding until the 2018 fiscal year. Programs included in this section help fund care, food delivery services and long-term care.

New amendments have been proposed this year to increase research on the economic welfare of the population over 65 and fund programs that prevent disease.

“More health research and measures like that will get people ready in various ways to address the issue,” Wilson said.

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