Staying Vigilant Against Diminished Capacity and Financial Exploitation

At Kimelman & Baird, our commitment to protecting clients extends far beyond investment portfolios—it includes preparing for the complex emotional and practical realities of aging. Our recent webinar, “Understanding Diminished Capacity and Financial Exploitation,” presented in collaboration with Kyle Fliehman of Fidelity Investments, shed light on how cognitive decline, social isolation, and digital vulnerability can create the perfect environment for financial abuse. This follow-up explores those risks further and offers real-world actions families can take today.

Elder financial abuse is a growing and underreported issue. In 2023 alone, older adults lost over $1.1 billion to scams, according to the Federal Trade Commission. And while large-scale fraud like identity theft makes headlines, the more nuanced and manipulative tactics—like convincing someone to subscribe to dozens of financial newsletters or coaxing them into “harmless” gifts—are just as damaging.

Older individuals are at greater risk of exploitation for several reasons. Cognitive decline due to aging, stroke, or injury can impair decision-making and increase susceptibility to persuasive tactics. Loneliness and lack of regular interaction may leave seniors eager to engage with strangers who later manipulate that trust. Many seniors are also less familiar with the tactics of online scammers, from phishing emails to complex “pig butchering” schemes—fraudulent investment cons that gain trust over time before asking for large transfers.

Moreover, shame and fear play a significant role in keeping victims silent. Many older adults don’t want to admit they’ve been scammed. They may fear losing their independence or facing judgment from their children. That’s why approaching these situations with empathy is critical.

Fidelity’s insights point to several steps families can take to prevent financial elder abuse.

1. It starts with communication. Initiating a conversation about finances doesn’t need to be a confrontation—it can begin with something simple, like offering to keep an eye on each other’s accounts. When approached as a partnership, this transparency helps create a comfort level that allows seniors to accept help without feeling patronized.
2. Developing a shared family financial plan is another important measure. Knowing who the key advisors are—attorneys, CPAs, or financial professionals—is essential. Families should work together to confirm that critical legal documents such as durable powers of attorney, healthcare proxies, and wills are up to date and securely stored. Planning ahead is especially important because diminished capacity doesn’t arrive with flashing warning signs—it happens slowly and is often first noticeable in small ways, such as missed payments or unusual spending patterns.
3. Simplifying financial life can also go a long way. Reducing the number of credit cards, automating bill payments, and setting up alerts for suspicious activity can help seniors maintain their independence while reducing their vulnerability.
4. Assigning roles within the family can ease the burden of oversight. One person might monitor day-to-day spending, another may review investment accounts, and a third can handle taxes or credit monitoring.
5. Maintaining regular conversations around financial wellbeing helps normalize the topic and avoid stigma. Scheduling monthly or quarterly family finance meetings, even if brief, keeps everyone on the same page. These conversations are not just about dollars and cents—they’re about staying connected, building trust, and fostering mutual protection.

The red flags discussed in the webinar—romance scams, government impersonation calls, cryptocurrency requests—can be intimidating, but being aware of them is the first step toward prevention. Knowing the scams and creating a proactive support system around an aging loved one can make all the difference.

Ultimately, protecting someone from financial exploitation is about more than vigilance—it’s about compassion. The conversation isn’t just financial; it’s emotional. Aging is difficult, and approaching these conversations with understanding instead of fear or frustration can help families avoid crises before they happen.

For additional tools and checklists to support this process, download the Fidelity Resource Guide on Elder Financial Abuse (PDF).

At Kimelman & Baird, we are here to help you navigate these conversations and build safeguards around your family's financial future. If you’d like support developing a family financial plan or identifying ways to protect your loved ones, we invite you to reach out to our team.

Kimelman & Baird is not affiliated with Fidelity Investments. The views expressed by the speaker or third party in the webinar are those of the speaker or third-party. Any such material or information presented by a third-party is for informational purposes only. Kimelman & Baird makes no representation as to the accuracy of any information presented by a third-party.