What Retirees Need from their Banks
Seniors are about to take over the world. Between 2025 and 2050, the number of seniors on the planet will double, and for the first time in history, there will be more people over 65 than children under age 5. How this massive demographic change will impact us is not entirely clear, but industries need to prepare for issues that an aging population will bring with them, and one of those is the rise of cognitive impairment.
According to the Alzheimer’s Association, “mild cognitive impairment (MCI) causes a slight but noticeable and measurable decline in cognitive abilities, including memory and thinking skills. A person with MCI is at an increased risk of developing Alzheimer’s or another dementia.” Population Reference Bureau estimates that the number of Americans living with Alzheimer’s could triple by 2050. And while some of us stay sharp well into old age, as many as 20 percent of seniors will eventually suffer from mild cognitive impairment. Not only does this increase the risk of forgetting to pay a bill or losing track of spending, but it makes seniors vulnerable to the threat of fraud and financial abuse.
The statistics are shocking: according to Forbes, seniors lose 2.9 billion dollars a year to abuse and fraud; 41 percent of seniors experience financial abuse, and 55 percent of the time someone close to the senior is to blame. Scams against the elderly are also on the rise and run the gamut from predatory marriage to Medicare fraud. Banks are not currently doing enough to protect seniors’ assets, and, as the population gets older, the need will be greater. Protecting the financial well-being of aging customers has never been more important. It is arguable that banks not only can, but must undertake the task of protecting the elderly, because no other institution or organizational body is in an equally strong position to do so. Financial losses for seniors will become more prevalent, and put greater pressure on family members, social services, charitable organizations and governments. Banks are at the frontline of this fight, and greater involvement could have a tremendously positive impact.
Here are some ideas banks should consider to address the issues that will come with the decline in cognitive ability:
Using automation to help seniors budget
Setting up automatic bill payments and direct deposits can help seniors who are experiencing MCI, both by reducing the number of tasks they need to remember and by circumventing the need for checks, which can be intercepted. Budgeting programs should use multiple notifications through a variety of communication methods to help those with flagging memory, and should adhere to routine schedules. As biometric recognition becomes more readily available, remembering passwords and PINs will become irrelevant. Fraud monitoring systems should be built specifically for seniors utilizing algorithms based on spending and budgets. EverSafe, an award-winning new financial monitoring system designed specifically to protect seniors, offers an excellent example that banks could imitate.
Education for seniors and staff
Banks have an opportunity to educate seniors about what kinds of threats to look out for and to suggest solutions that can safeguard their money in the future. Most seniors who have lost money to financial abuse or fraud do not even realize it has happened because they don’t know what to look out for, or what constitutes abuse. Banks should create senior-specific educational programming that could include seminars, videos and printed brochures. American Bankers Association offers a free program called Safe Banking for Seniors, which supplies free educational resources for banks. The program is specifically geared towards protecting seniors against financial abuse. When banks educate seniors about financial abuse and fraud not only are they empowering seniors with knowledge, but they are also initiating a dialogue that positions bank staff as a trusted ear to turn to if something happens. This is important, because isolation is a key element that plays into vulnerability.
Staff should be trained to recognize the signs that a senior is beginning to make poor financial decisions, which can be a sign of cognitive decline. They should know how to determine whether a relative or friend who suddenly appears at the branch with the senior is there for the right or wrong reasons. Banks need to clearly define protocols with legal and ethical parameters that protect seniors first and foremost. Financial institutions should not wash their hands for fear of liability, and frontline staff should not be left to make decisions about such delicate matters without clear, specific guidelines, and legal support. Protecting seniors’ finances will become critical to the global economy. If seniors can’t support themselves, it will place an undue burden on their families, and the impact will reverberate throughout the planet.
Creating options beyond the power of attorney
Banks should explore more creative options for seniors who are experiencing cognitive decline to bridge the gap between complete autonomy and power of attorney.
A power of attorney can open the door to financial abuse by giving a third party too much autonomy with too little oversight. Financial abuse can be as seemingly benign as purchasing groceries with a senior’s credit card, an infraction that could be easily explained as purchases made for the senior. It is not in a senior’s best interests to lose complete control of their finances unless they are truly incapable. However, there is a grey area during cognitive decline when seniors need extra help and protection, but should still have some measure of control.
Read-only accounts for relatives are one option being explored by some banks. Others are delaying payments for unusual charges until bank staff can verify authenticity. A limited power of attorney could help seniors maintain some independence but provide protection if their decision-making is becoming impaired, while safe-guarding against relatives misusing their access.
Banks as trusted protectors of the community
As the population ages, mild cognitive impairment places seniors’ financial well-being at serious risk. If banks do not reinforce security, education, and staff skills to protect seniors, the impact could be catastrophic. Banks are at the frontlines as guardians of seniors’ liquid assets and cannot afford to ignore the challenges cognitive decline will bring. Fostering an environment of trust and care, advocating for awareness, and supporting seniors will strengthen banks’ role in the community. This care, which is arguably the moral duty of financial institutions, will be recognized and appreciated by concerned family members and the community, who will eventually need financial advice and support in their golden years.