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What Makes People Vulnerable to Elder Fraud?

New research supported by Merrill Lynch provides some unexpected clues that could help you protect your loved ones

THOMAS BLOMBERG FOUND MORE THAN HE BARGAINED FOR when he visited a Florida retirement community to conduct ground-breaking research on the causes of elder fraud this past summer. He came away with plenty of data. What he didn't expect was how deeply moved he'd be.

"Talking with the victims was emotionally charged," says Blomberg, dean of the College of Criminology & Criminal Justice at Florida State University. In particular, he recalls one man who confessed, with tears in his eyes, to losing $3,500 on the false promise of unlimited cruises. "It's not the money," the man said. "I just feel so stupid." That sense of embarrassment, says Blomberg, can cause people to isolate themselves from those who could help them avoid becoming a victim again.

“It’s not the money. I just feel so stupid,” said one victim after losing $3,500 to a scam artist promising unlimited cruises. That sense of embarrassment can cause people to isolate themselves from those who can help.

Blomberg's research, conducted by Florida State University with support from Merrill Lynch, uncovered the most common perpetrators of fraud, as well as triggers that can make people susceptible.1 The findings have been used to identify strategies that friends, family—even financial advisors—can use to help protect those most vulnerable, says Michael Liersch, head of behavioral finance and goals-based consulting for Merrill Lynch Wealth Management.

For starters, Liersch recommends families hold regular meetings to discuss financial concerns and decision-making. It can also help to connect trusted financial professionals with those who are watching out for an elderly relative, he says. That way everyone can work together to help spot and prevent problems.

Read “What Behavioral Finance Has to Say About Financial Elder Fraud,” co-authored by Liersch, for more insights and strategies informed by Florida State University’s research.

3 Questions to Ask Your Advisor

  1. What signs should I watch for that my parents might need help managing their finances?
  2. How can I start a conversation with my parents about their eldercare needs?
  3. Could establishing a trust help our family manage my parents' financial needs?

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1 Thomas G. Blomberg, Julie Mestre Brancale, J.W. Andrew Ranson, Brae Campion and George Pesta, “Elder Financial Exploitation in The Villages, Florida.” Florida State University College of Criminology and Criminal Justice, The Center for Criminology and Public Policy Research; forthcoming.

Case studies are intended to illustrate brokerage products and services available at Merrill Lynch and banking products and services available at Bank of America. You should not consider these as an endorsement of Merrill Lynch as an investment adviser or as a testimonial about a client's experiences with us as an investment adviser. Case Studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary. The investment strategies discussed are not appropriate for every investor and should be considered given a person’s investment objectives, financial situation and particular needs. Clients should review with their Merrill Lynch Financial Advisor the terms, conditions and risks involved with specific products and services.

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