Last year’s passage of the Senior Safe Act sparked a number of industry articles shining the spotlight on the crime of elder financial abuse.
As the number of older Americans is increasing, so is this form of financial exploitation, which is estimated to cost seniors roughly $2.9 billion annually.
The new law encourages financial institutions to train employees in detecting suspicious activity and provides a reporting process as well as liability protection for employees who report suspected abuse.
One of the more difficult aspects of elder financial abuse is that the perpetrator is often a family member or close friend. Victims are often reluctant to acknowledge the abuse, out of fear of damaging the relationship and/or embarrassment.
While such legislation is a step in the right direction to protect seniors, an equally damaging yet lesser known form of financial abuse can affect anyone involved in an intimate relationship.
Financial abuse, sometimes termed economic violence, is among the most common aspects of domestic violence, and can affect men as well as women.
Experts estimate that financial abuse occurs in 99% of domestic violence cases. There is no comparable federal law to protect the finances of domestic violence victims, who must instead rely on a patchwork of laws that vary from state to state.
While Congress passed the Violence Against Women Act in 1994 which provides resources to survivors, consistently funding those resources has been a different story. Funding under the current budget expired during the most recent government shutdown.
Recognizing domestic economic violence
Financial abuse is a critical element in almost all domestic violence because it’s such a powerful way to isolate an intimate partner and control their behavior by limiting access to their own earned income or shared financial resources.
Such abuse can take several forms, including:
- Insisting that the victim turn over their paycheck or credit cards
- Holding title to any shared assets such as a home or vehicle only in the abuser’s name
- Intercepting or withholding joint bank statements and other financial records
- Hiding funds
- Giving the victim an ‘allowance’ that the abuser controls
- Criticizing spending on normal, everyday items
- Making big financial decisions or spending large amounts of money without shared decision-making
- Expecting the victim to pinch pennies while the abuser spends freely
- Damaging a victim’s credit history or score
- Interfering with the victim’s ability to work and earn an income through harassment or preventing them from going to work
Victims frequently feel trapped in the relationship because they may be concerned about their ability to support themselves or their children, and financial insecurity is one of the primary reasons a person may choose to remain in or return to an abusive relationship.
They may fear that attempting to assert themselves will only make the situation worse, and those fears are all too often well-founded.
One in four women and one in seven men have been victims of severe physical violence (e.g. beating, burning, strangling) by an intimate partner in their lifetime, according to the National Coalition Against Domestic Violence (NCADV).
What can plan advisors do?
It’s a delicate situation, and many advisors may hesitate to initiate a conversation with someone they suspect may be taken advantage of financially by their spouse or partner.
If the advisor has an opportunity to speak to the client without their spouse or partner present, for example during an onsite meeting, one way to approach it is to simply ask the client or participant if anything or anyone is creating stress for them in terms of their financial security.
While the client may not speak up at first, it can create an opening that allows for awareness and permission to talk about their situation at a later time.
It’s important to remain nonjudgmental, so that clients or participants can feel safe talking about their situation.
Advisors can also have available state and local referral information regarding community resources for domestic violence survivors, to support the client in making decisions about how to proceed given their specific circumstances.
Nationally, resources include the National Domestic Violence Hotline at 1-800-799-7233 and the National Network to End Domestic Violence. Their website is https://nnedv.org.
Dr. Martha Brown Menard is the Senior Researcher and data diva for Questis. She is a research scientist, financial wellness coach, and member of the Association for Financial Counseling and Planning Education. She is passionate about democratizing personalized financial guidance through scalable and configurable technology.