Whealthcare: A strategy to tackle one of the earliest signs of dementia
by Adam Clair
Among the populations most at risk for losing their financial security are older adults, and as the population ages and financial predators become craftier, threats to financial security are growing.
Older adults can experience cognitive aging and lose the ability to manage their money, leaving them at risk for financial abuse and exploitation, but patients with dementia caused by Alzheimer’s and other diseases are even more vulnerable to threats to their financial security.
The Consumer Financial Protection Bureau (CFPB), which oversees banks and financial institutions, estimates total annual losses from financial exploitation and abuse of seniors range anywhere from $3 billion to $40 billion. A Delaware senior advocacy group received twice as many complaints in 2015 as it had 10 years earlier. The number of complaints specifically addressing financial exploitation tripled.
“Financial decision-making demands a lot of our cognitive abilities and so it’s often one of the first signs that someone is experiencing cognitive problems from a disease like Alzheimer’s,” said Dr. Jason Karlawish, University of Pennsylvania Professor of Medicine, Medical Ethics and Health Policy, and Neurology and Co-Director of Penn Memory Center. “Among our brain-based daily activities, managing our financial matters demands we orchestrate our attention, concentration, memory and decision making.”
Because financial difficulty is one of the first signs of cognitive problems, however, Karlawish believes it presents an opportunity.
“If we want to start identifying people who are having clinically significant cognitive changes,” he said, “one way to go about doing that in a naturalistic, non-threatening and ecologically valid way is to figure out ways to surveil how people are doing on their day-to-day financial matters.
“If we start to look after people’s wealth, we can also effectively monitor their health. It suggests a new paradigm for seeing this issue as part of a public healthy problem.” Karlawish explains that this new paradigm unifies these groups that people once thought of as fairly disparate, namely professionals in health care and financial services.
Karlawish coined the term “whealthcare” to describe this paradigm of merging banking and financial services — that is, wealth — with healthcare. Though financial abuse and exploitation is typically seen as and handled as a law enforcement issue, Karlawish believes we can address elder financial abuse and neglect more effectively if we frame those are part of the public health issue of assuring financial security with aging.
“Much like infectious diseases, one of the reasons it’s a public health problem is because it affects other people,” he said. “As individuals lose the ability to manage their money, they’re not in a position to make up the lost funds. They can’t go back to work. Someone else has to step in and cover for the losses. That’s either family or society, through tax dollars. It’s a problem that the methods of public health, namely education, empowerment and surveillance, can begin to help to identify it so that intervention can occur. The frontline of the surveillance is not doctors but bankers.”
The Many Faces of Financial Exploitation
Financial abuse and exploitation can take many forms. Predators can pose as financial services firms or debt collectors or even pretend to be friends or family members of a potential victim. In some cases, a predator will approach the victim of a scam with an offer to help them recover, only to take further advantage of them. In cases like these, however, financial predators can only exploit those who have given them access to their funds or accounts in some way.
“A vampire can’t come in your house uninvited, and I see financial predators the same way,” said Markita Morris-Louis, senior vice president of community affairs and general counsel at Clarifi, a non-profit financial services organization. “If you don’t invite them in, it’s harder for them to get access.”
If financial predators had capes and fangs, they’d be easy to spot (and could be thwarted with just a head of garlic). In the real world, though, they look like everybody else. In fact, they are usually someone close to you: 59 percent of the perpetrators of financial exploitation and abuse are the family members and friends of the victim, which can make it hard to see it happening.
Caregivers can be the most helpful resources for protecting those with dementia, but they’re also the most likely to commit abuse. Detecting that abuse can be especially challenging when caregivers are immediate family members. Parents often have liberal financial relations with their children, for example, paying for their education or providing a safety net if a child needs help paying a bill.
Financial abuse and exploitation is not always easy to assess, and the issue is compounded by the deep feelings of fault it engenders. A 2010 study published in the American Journal of Public Health found that more than 5 percent of seniors reported having been victims of financial abuse at the hands of a family member, but very few of them reported it to authorities.
“There’s a level of embarrassment and shame that makes it the second most underreported crime, after rape,” said Roslyn Quarto, executive director of Empowering and Strengthening Ohio’s People, a non-profit financial counseling agency.
But it’s an increasingly common problem that cuts across every demographic.
“One misconception is that people who are victims lack intelligence or that it’s their fault,” said Naomi Karp, senior policy analyst in the Office for Older Americans at the Consumer Financial Protection Bureau. “People with cognitive impairment are more vulnerable, but these scams can happen to anyone.”
Education is a big part of the fight. Seniors themselves and especially the caretakers of those with dementia can find financial literacy resources at the Consumer Financial Protection Bureau and other non-profits.
“We like to emphasize that financial caregiving is an important subset of being a caregiver,” Karp said. “It’s not just the activities of daily living and health care and the things you think of as long term care. Financial management is a big piece of it. People are often not equipped to do that, and we’re trying to give them tools for that.”
In addition to the Consumer Financial Protection Bureau, seniors and caretakers can go to their local attorneys general, AARP, and other non-profit organizations for help.
Caregivers are among the most valuable resource to assure individuals with dementia live with quality of life and financial security. They can help an older adult keep an eye on her finances, checking bank statements and pulling credit reports. Seniors most at risk for financial abuse and exploitation are those who live in isolation. Having people around not only provides extra eyes to monitor for signs of abuse, but it also provides opportunities for engagement, which can slow the cognitive decline caused by Alzheimer’s and other forms of dementia.
Naturally, though, banks and other financial institutions are in a position to provide protection.
“These bank tellers are the first line of defense,” said Roslyn Quarto. “Some seniors leave home for three reasons: to go to food shopping, to go to church, and to go to the bank.”
Bankers can notice changes in a client’s behavior, such as if someone has been spending the same amount of money each month for years but suddenly is spending significantly more. Simple changes in appearance or showing up to the bank with someone else doing all the talking for them can also indicate problems.
Financial institutions around the world are beginning to incorporate a new concept called “age-friendly banking,” which includes things like making ATM cards with brighter colors, bigger numbers, and arrows to indicate which direction to insert in the machine, alerts for certain types of account activity and read-only access for a third party to see account transactions.
“Anything can be considered, but it’s really sitting down with your customers in focus groups and figuring out what your customers want,” said Joe Snyder, director of older adult protective services at Philadelphia Corporation for Aging. “The most loyal customers and the ones with the most money are the older customers.”
Though banks are making progress on the age-friendly banking front, Karlawish believes there’s more to be done. In particular, the power of attorney model that many seniors follow can be problematic, as entrusting someone with that power can also give him the opportunity to exploit. He advocates for greater resources allowing third parties to view a senior’s accounts without having access to trade or transact on it.
“You’d like a system set up that professionals or family can monitor but are limited in their ability to do things,” he said. “So for example, with a view-only account, my son can see trouble but he can’t trade on the account. He can’t even see my balances, but he can look and ask ‘why is he sending to this place?’ That presents a nice opportunity for surveillance that doesn’t turn into fraud.”
Karlawish notes that multiple people can serve in this role. “You and the bank, so there are more eyes watching. You can imagine a role for banks to watch over their clients to minimize what is simply the fact that a lot of abuse and fraud occurs at the hands of family and friends.”
Karlawish suggests other changes.
“In the world of whealthcare, the financial institutions that have charge of my accounts have the names of trusted others they can reach out to if they suspect there’s something wrong with me,” he said. “If they, for example, start getting calls from me five times in one day to execute the same trade, they have someone they can call.
“The second thing is the bank or financial services institution has set up technology that can unobtrusively identify that I’m having problems. If they start to notice changes in my bill paying habits or withdrawal habits, they can reach out to me and see how I’m doing, and have the resources to do that. The staff will be trained on how to talk to an older adult who may be having problems. If that system was integrated with my physician, that they could reach out to my physician and say this is what we’ve noticed about your patient, and we want to make you aware of this so you can look into what’s going on.”
Though there are changes banks and financial institutions can begin implementing now, Karlawish also believes some regulatory changes are necessary. In particular, banks should have more freedom to intervene if they believe something is amiss. Bankers and algorithms can be deployed to monitor for suspicious changes in activity, but even if a bank suspects there’s a problem, they can still be held liable for not completing a transaction promptly. Removing that threat and encouraging a bank to report signs of abuse or cognitive decline could help.
So what’s in it for the financial institutions? Banks are motivated foremost and perhaps exclusively by profit, and so serving the greater good is not a compelling incentive on its own.
“I think they need to see a business model that recognizes there’s money to be had in providing ‘whealthcare,’” said Karlawish. “If you let your clients’ brains fall apart in front of you and allow their money to be stolen or otherwise misappropriated, that’s money you lose. That’s not good. Secondly, it’s about your brand and recognition. What bank wouldn’t want to be known as the bank that actually takes care of its clients?”
In May 2016, the World Economic Forum Global Agenda Council on Ageing and Penn’s Health Brain Research Center jointly hosted a whealthcare-focused symposium titled “Aging and Cognition: Maintaining Economic Security in Later Life.” Presentations give by experts from the financial service, banking, regulatory and advocacy industries are all available at www.pennadc.org.
The personal website of Dr. Karlawish offers a glimpse at his past and upcoming speaking engagements and provides more information about his first novel, Open Wound: The Tragic Obsession of Dr. William Beaumont.
Making Sense of Alzheimer’s is a creative space for people to understand the past, present and future of Alzheimer’s disease. It is an evolving forum, a gallery of ideas, a museum without walls.
The Penn Memory Center, co-directed by Dr. Karlawish, is a single, unified Penn Medicine source for those age 65 and older seeking evaluation, diagnosis, treatment, information, and research opportunities related to symptoms of progressive memory loss, and accompanying changes in thinking, communication and personality.
Whealthcare in the media
Not Losing it: The Elderly, Cognitive Decline, and Banking (The Economist)
Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers. Dr. Jason Karlawish discusses how his concept of "whealthcare" can help physicians and banks jointly help the aging population.
Whealthcare: Preventing financial fraud and promoting Cognitive Health and wealth (Forbes.com)
Dr. Jason Karlawish, co-director of the Penn Memory Center, introduces the concept of "whealthcare" by introducing Renee and Arthur Packel in his Forbes column. Arthur had lost nearly all of the couple's life savings, either through fraud or poor financial decisions. At the Penn Memory Center, he was diagnosed with mild-stage dementia caused by Alzheimer's disease.
In washington testimony, Karlawish calls for federal whealthcare action (Penn Memory Center)
Testifying before the Elder Justice Coordinating Council in April 2016, Dr. Jason Karlawish introduced whealthcare as “a new model to assure the financial security of aging Americans.”
“Among the first signs of cognitive changes caused by diseases such as Alzheimer’s disease, and cognitive aging as well, are changes in our capacity to manage our finances,” putting the banking and financial services industries on the front lines of screening for cognitive impairment, Karlawish said.
The hidden cost of dementia that can steal your life savings (www.nj.com)
Columnist Tony Dearing outlines actions that can be taken by children of older adults to help to protect their parents' wealth, including gaining read-only access to bank accounts or setting up automated bill-paying.
Aging and Cognition Symposium (Penn Memory Center)
The World Economic Forum’s Global Agenda Council on Ageing (WEF GAC) and the University of Pennsylvania’s Healthy Brain Research Center were pleased to host “Aging and Cognition: Maintaining Economic Security in Later Life” in May 2016.
At the fourth and final symposium in a series presented by the WEF GAC, thought-provoking debates and discussions led by world-renowned leaders in their fields informed and inspired the select audience of 60 attendees from academia, financial services, technology firms, and dementia research.
Building Communities to Fight Elder Financial Exploitation (Medium)
In a September 2016 presentation at the Diversity in Today’s Financial Marketplace conference hosted by the North American Securities Administrators Association, Philip Marshall included whealthcare as one of the cornerstones of a community coming together to combat elder financial exploitation.
Cognitive Aging, Health and money: Why we need whealthcare (Leonard Davis institute of health economics)
Ana Bonilla-Martinez, a summer intern with the Penn Memory Center, describes what she had learned about whealthcare by telling the story of Dr. Max Gomez, whose father unknowingly lost his business and all savings.
If you have questions about the concept of whealthcare or suggestions for www.whealthcare.org, use the form below.