Originally published in Carroll Capital, the print publication of the Carroll School of Management at Boston College. Read the full issue here.
As the ranks of older Americans have swelled, so has the reality of elder financial abuse. The problem is hard to police because the perpetrators, including family members and caregivers, are often close to the victim. Some 30 states have stepped up with laws that deputize financial professionals to report suspicious activity, partly by altering confidentiality requirements that stood in the way of such monitoring.
Carroll School Assistant Professor of Finance Hanyi (Livia) Yi and two colleagues have studied the effects of these new statutes, presenting their findings in the Journal of Financial Economics.
The upshot: Deputization works. With their new powers, investment advisors, brokers, and others were able to intervene early and prevent abuse by temporarily halting questionable transfers from client accounts.
In addition, the deputies told family members and others about the laws, adding to the deterrent effect—as shown in a key finding that the number of these crimes reported to authorities dropped significantly in the 30 states but not others. The results indicate that the laws “were successful in reducing the abuse of seniors, especially for those who are most socially isolated,” wrote Yi and coauthors Bruce Carlin and Tarik Umar of Rice University.
