Elderly people are much more likely to suffer emotional distress than financial distress when they become the victims of the growing wave of financial fraud and abuse, says a survey by the American Institute of CPAs (AICPA) released Tuesday.

Thirty-seven percent of AICPA Personal Financial Specialists (PFS) have had clients who experienced substantial emotional distress because they fell victims of fraud, while 5 percent have had clients who experienced a substantial financial impact, The AICPA Personal Financial Planning Trends Survey says.

At the same time, 47 percent of the 266 CPAs surveyed for the study say they have seen an increase in elder fraud and abuse in the last five years.

“Financial fraud among the elderly is rising for a couple of reasons,” says Jean-Luc Bourdon, CPA/PFS, and a member of the AICPA’s PFP executive committee. “Demographics play a role. Due to aging baby boomers, the population age 65 and over is growing fast. Furthermore, expanded longevity leads to a fast growing population age 85 and older. Expanded longevity also leads more seniors to enter a period in life when they experience cognitive decline. Sadly, vulnerability attracts crimes of opportunity.

“Also, older Americans use technology that was not available or adopted years ago: email, social media, online financial transactions and account access,” Bourdon adds. “Technology makes communication accessible and affordable across the globe, but it also means that scams, phishing and hacks often originate overseas and criminals anywhere in the world can target seniors. Technology also offers new and creative ways for criminals to act. Advisors and their clients have to keep up with increasingly sophisticated scams.” 

“For elderly individuals, being a victim of financial fraud or abuse can be emotionally devastating,” says Ted Sarenski, a member of the AICPA’s PFP conference planning committee. “The impact is compounded when the perpetrator is a member of their own family or a friend. One of the unique challenges for CPA financial planners working with elderly clients is balancing their desire to help their family members financially with the need to ensure that they have the means to continue to meet their own expenses.”

The most common type of elder financial abuse or fraud seen by the CPA financial planners over the past five years was phone and Internet scams seen by 79 percent of those surveyed. But following close behind was financial abuse of those elderly people who found it impossible to say no to relatives (72 percent) and elderly people providing support for adult children (57 percent), the survey says.

“In elder care and planning issues, particularly those that involve dementia, the CPA financial planner serves as the quarterback––calling the plays and making sure that everyone involved is playing the role that they are supposed to,” Bourdon says. “Whether it is decisions regarding estate planning, long term care or housing, it’s crucial that CPA financial planners coordinate with other professionals employed by their elderly clients.”

Strategies exist to help safeguard elderly clients from financial fraud and abuse and to ensure their assets are protected, says the AICPA. A financial plan should be established and reviewed every six months to make sure enough assets are available or if adjustments need to be made. In addition, elderly clients should be advised to ask their financial planner about any solicitations before giving money away.

Assets for a client who may have diminishing capacity can be placed in a revocable living trust and a co-trustee can be assigned. In that way, two signatures are needed for any check, which can reduce the chance of an elderly client giving to unscrupulous people, the AICPA says.