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Cognitive Impairment Makes Seniors Less Guarded, More Susceptible to Financial Fraud

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A study in the Journal of Experimental Social Psychology titled "Age-related decline in executive function predicts better advice-giving in uncomfortable social contexts" finds that elderly people with declining cognitive abilities provide, as the name of the paper suggests, better, albeit, more insulting advice.

From the abstract:
While age-related EF (executive function) decline disrupts social and cognitive functioning in many domains, such degeneration may also carry the unforeseen benefit of improving communication in uncomfortable social contexts. We examined the performance of relatively low and high EF older adults and young adults on the socially distressing task of providing critical advice to a troubled obese teenager. Relative to higher EF older adults and younger adults, lower EF older adults were more open, provided more advice, and were seen as more empathic...Our findings suggest a potential silver lining to age-related cognitive decline.
While that "silver lining" may be so, one way that age-related cognitive decline hurts seniors is that a lowered guard makes them more susceptible to financial fraud.

Elder financial abuse costs US senior citizens more than $2.6 billion a year, according to a report by the MetLife Mature Market Institute. And more than 7.3 million of them -- one out of every five citizens over the age of 65 -- have already been victimized by a financial swindle.

“Elder financial abuse has been called the ‘crime of the 21st century,’ ” says Sandra Timmermann, director of the institute. “With the present state of the economy, older Americans are at a greater risk than ever of having their financial security threatened. And, for every dollar lost to theft and abuse, there are still more related costs associated with stress and health care and the intervention of social service, investigative, and legal entities.”

But Dr. Robert E. Roush, associate professor of Medicine, Geriatrics Faculty, at the Baylor College of Medicine, has designed a program, in conjunction with the North American Securities Administrators Association, the National Adult Protective Services Association, the Investor Protection Trust, and research firm Infogroup/ORC, to start to try to correct this.

The “Elder Investment Fraud and Financial Exploitation” prevention campaign will help doctors and other medical professionals that seniors see, in some cases, more regularly than their families, about how to spot elderly people who may be particularly vulnerable to financial abuse -- particularly those who show signs of mild cognitive impairment, which, according to the American College of Physicians, affects about 20% of the population over 70. A recent Duke University study estimates there are 8.8 million people 71 years old and up who have cognitive impairment plus full dementia.

IPT President and CEO Don Blandin says:
Given that frontline medical professionals who deal every day with older Americans are ideally positioned to spot the impaired mental capacity that can leave seniors vulnerable to financial abuse, our new program seeks to inform doctors, nurses, and others about the warning signs of elder investment fraud and financial exploitation. Our goal is to improve the communication among medical professionals, older Americans, adult children, and state securities regulators in order to head off financial swindles before the damage is done.
"We talk about physical health and psychological health, but we also need to start asking about fiscal health. As the older population of 37 million more than doubles over the next two decades, so will those who will experience cognitive impairments that place them at risk of fraudulent schemes," Roush noted.

When asked if the pilot program, which began in Texas, had been a success, Denise Voigt Crawford, Texas securities commissioner and president of the North American Securities Administrators Association, referred to a number of cases, including one particularly craven scam involving a former attorney named Edward S. Digges Jr., who was sentenced to 99 years in state prison for orchestrating a “multistate, fraudulent investment scheme that involved the lease of credit card and debit card terminals.”

Digges offered unregistered securities that were purportedly based on the revenue generated by point-of-sale terminals used to process credit card transactions, and raised at least $10 million from about 130 investors, most of whom were elderly.

As the program rolls out nationwide in association with the American Academy of Family Physicians, the National Area Health Education Center Organization, and the National Association of Geriatric Education Centers, among others, it will mark an important first step in combating the ugly exploitation of our nation’s elderly.

It would also be an inexpensive and effective way for health insurers like Cigna, Aetna, Humana, and UnitedHealth Group to help protect countless numbers of people by making sure each and every physician on their rosters has the IPT’s Clinician’s Pocket Guide to Elder Investment Fraud and Financial Exploitation.

In this day and age, where dollars sometimes trump doing the right thing, there’s no question it would be the right thing to do.
POSITION:  No positions in stocks mentioned.