It has been estimated that around £10bn is lost to financial scams each year, with Age UK reporting that almost 5m people aged 65 or over believing they have been the victim of a scam.
One of the causes of this has been the dramatic increase in the use of technology in financial planning.
In the past decade alone, we have witnessed many financial service providers retreat from assisting clients directly to become largely internet-based platforms.
The proliferation of digital technology has left even the most technologically capable pensioner in danger of succumbing to fraudAs cost effective as this approach may be, the proliferation of digital technology has left even the most technologically capable pensioner in danger of succumbing to fraud online, over the phone or via the post.
With this new threat, now more than ever before we in the wealth management sector are in the unique position of being able to safeguard the financial security of our clients and their families.
Research from Yale University has shown that as we grow older, the less risk averse we become, increasingly losing the capacity to recognise untrustworthy behaviour in others and more susceptible to making drastic decisions.
Advancing age, poor health and loneliness are just a few of the factors that expose the most vulnerable in our society to financial abuse by scammers.
Worryingly, in the US, 60 per cent of perpetrators are family members, according to the National Council for Ageing.
The red flags of financial abuse can come in many forms, but changes in social behaviour like the appearance of a relatively new close companion, distant family member or new best friend can be warning signals that someone might be vulnerable.
Unusual account activity including sudden, large withdrawals, unexpected mailing address changes and suspicious signatures on documents are also red flags.
However, with client contact becoming increasingly limited to phone calls and email, these crucial indicators can be easily concealed, which is why delivering advice and guidance face-to-face has never been more important.
The limited strategies and policies put in place by the FCA has resulted in a current lack of training in the industry that focuses on pre-empting and recognising the tell-tale signs of financial abuse.
As advisers, we hold a privileged position.
We can establish long-lasting relationships with clients that are built on mutual trust and respect, becoming acutely attuned to their behaviour and habits, both personally and financially.
Having an awareness of the challenges that are potentially facing their more elderly, vulnerable clients could see financial advisers and managers work with their clients earlier to set up a trusted contact, either a family member or close friend, who can provide support and guidance should an issue arise in the future.
This is why, in a sector increasingly dominated by technology, face-to-face meetings with clients are so important.
It is only through the personal relationships developed by such meetings that advisers can come to truly understand their clients' needs and behaviours, helping to spot discrepancies or strange behaviours.
While technology of course has its benefits within the financial sector, a balance should be struck to ensure that the human element, which is integral when managing a client’s finances, is celebrated rather than removed.
By 2040, it is predicted that one in seven people in the UK will be over the age of 75 and with the World Health Organisation anticipating neurodegenerative diseases, such as Alzheimer’s , Parkinson’s and dementia, becoming more common than cancer diagnoses, the financial abuse of the elderly is a problem that is not going away.
But by creating a culture that encourages conversation and education to address these challenges, we in the financial services sector can create an environment of inclusion and protection for older and more vulnerable people.
Erin Linehan is associate general counsel and head of senior and at-risk clients at Raymond James
