Inheritance impatience seems to be getting the best of family members, friends and caregivers, who are also the ones perpetuating a growing percentage of elder financial fraud—a national scourge that now totals $36.5 billion in lost funds every year, according to the National Council on Aging.

Family, friends and caregivers commit nearly 81% of the financial fraud perpetrated against elders in Arizona and 67% of elder financial fraud in New York. At a minimum, familiar faces are responsible for at least half of senior financial fraud across the country, adult protective services agencies reported.

“Among the things that keep me up at night … is the fact that every day there are bad people out there targeting the elder community,” said Securities and Exchange Commission Chairman Jay Clayton at a Thursday roundtable devoted to the topic of preventing elder financial abuse.

“I worry about the fraudsters who are constantly thinking of new ways to try to rob our parents, our grandparents and anyone who has a 401(k) plan or some kind of retirement plan,” and cheat them out of their hard-earned money, he said.

Clayton, the nation’s top securities cop, said he felt compelled to take over his own grandmother’s finances after his grandfather died. Clayton saw his grandmother’s vulnerability and the scam artists that began circling.

His grandparents “had a portfolio and not a huge amount of money, but I will tell you the number of charlatans that approached her over time was substantial,” he said. “That said, if she had not been invested in our capital markets, her retirement would have been materially much less comfortable and more stressful. These are the types of considerations that have formed my thinking.”

The number of Americans aged 65 and older who report being victimized by financial fraud is one in five, but that number is likely much higher, since only one in 44 cases of financial abuse is ever reported to the authorities, a recent MetLife study found.

“While the commission is actively pursuing bad actors and returning money, prevention is critical,” Clayton said. “Let’s be clear. Even if we get them their money back, taking two to three years to get them their money back is too long.”

State agencies that collect information on senior financial abuse are reporting a marked upswing of fraud by familiar faces, said Lori Delagrammatikas, the executive director of the National Adult Protective Services Association (NAPSA), who also spoke at the SEC roundtable.

“I have to say that most adult protective service cases are a result of family member fraud, ranging from power of attorney abuses to misuse of credit cards,” she said. “We see soup to nuts from outright theft to sweetheart scams on a regular basis,” she said.

Delagrammatikas said it was critical to the safety of seniors that financial services institutions and advisors report red flags when they see them.

“Adult protective services does three things: We take in reports of abuse, we investigate and we remediate. You reporting red flags helps us because a lot of times when someone will steal your money, they’ll also neglect you or hit you,” she added.

Adult victims in these cases “may not be able to take care of themselves in their home, get to medical appointments, fill prescriptions,” she said. “If you’re seeing red flags of financial abuse, there may be other very deep things happening besides the loss of money.”

How Advisors Can Help

Advisors who report abuse must follow up with pertinent documentation, something not all have been diligent about doing, Delagrammatikas said. Without documentation, it is nearly impossible for protective services to get law enforcement or state attorneys general to investigate.

“Once you report to us, please follow up with documentation so we can go forward with law enforcement and have records and evidence,” she said.

“In my state of California, for instance, we can’t cross-report financial abuse to another agency without investment documentation and evidence,” Delagrammatikas said. “That is now a requirement. We need more than a report. We need the records you have in order to move forward.”

The Financial Industry Regulatory Authority’s two new senior investor rules and the Senior Safe Act safeguards advisors from legal exposure, she said.

Staff at adult protective services may also need advisors’ finesse in understanding what the investment statements and documentation mean to a case. “As I’ve heard more than one social worker say, ‘I didn’t go to college to do math.’ We need your help understanding what that spreadsheet or statement means,” said Delagrammatikas.

Her organization, NAPSA, is also working on a new request-for-records form that individual state agencies will send to advisors and others to obtain important documentation. “When we send you the form, we’d like you to respond,” she said.

“All I can do is say: Please partner with us. We’re hoping this will become a culture shift where reporting and then following up with adult protective services becomes an expectation in your firm.”

Citing the growing number of cases of family and caregiver financial fraud against seniors, Delagrammatikas said advisors and their staff are often the frontline of defense for vulnerable seniors. “That’s where we need you to step in, between family members if needed, to protect seniors against financial exploitation.”

Delagrammatikas also said she hopes advisors take full advantage of the new Finra rule that allows them to collect and use a trusted contact for each client if they see something out of the ordinary happening. “This allows us to get back to someone as well to ensure the senior is making decisions they should be,” she added.