Financial Decision-making Abilities and Financial Exploitation in Older African Americans: Preliminary Validity Evidence for the Lichtenberg Financial Decision Rating Scale (LFDRS)

Abstract

This study examines preliminary evidence for the Lichtenberg Financial Decision Rating Scale (LFDRS), a new person-centered approach to assessing capacity to make financial decisions, and its relationship to self-reported cases of financial exploitation in 69 older African Americans. More than one third of individuals reporting financial exploitation also had questionable decisional abilities. Overall, decisional ability score and current decision total were significantly associated with cognitive screening test and financial ability scores, demonstrating good criterion validity. Financially exploited individuals, and non-exploited individuals, showed mean group differences on the Mini Mental State Exam, Financial Situational Awareness, Psychological Vulnerability, Current Decisional Ability, and Susceptibility to undue influence subscales, and Total Lichtenberg Financial Decision Rating Scale Score. Study findings suggest that impaired decisional abilities may render older adults more vulnerable to financial exploitation, and that the LFDRS is a valid tool for measuring both decisional abilities and financial exploitation.

The person-centered approach to working with older adults is a holistic alternative to traditional, skills-oriented assessment techniques. This method has been shown to support greater autonomy in older adults, and in particular those with neurocognitive disorders (Fazio, 2013). It aims to identify and build on the individual’s strengths, while honoring a person’s values, choices, and preferences (Fazio, 2013). Some of the underlying assumptions (Mast, 2011) are that (a) people are more than the sum of their cognitive abilities, (b) traditional approaches overemphasize deficits and underemphasize remaining strengths, and (c) it is important to understand the person’s subjective experience. Whitlach (2013) emphasizes the importance of persons with neurocognitive impairment continuing to have choice, pointing out that even people scoring well into the impaired range on the MMSE can provide valid and reliable responses to questions about their preferences. Mast (2011), in turn, has taken a new approach to the assessment of persons with neurocognitive impairment: Whole Person Dementia Assessment, which integrates person-centered principles with standardized assessment techniques.

The Lichtenberg Financial Decision Rating Scale (LFDRS; Lichtenberg, Stoltman, Ficker, Iris, & Mast, 2015a) applies Mast’s Whole Person Dementia Assessment method to the assessment of financial decision-making abilities (i.e., decisional abilities). The LFDRS examines the specific sentinel financial decisions an older adult is making and has made, and determines whether he or she has the requisite decisional abilities. Lichtenberg and colleagues (2015) have previously described the scale’s development and its reliability. In this study we provide data to support the concurrent validity of the LFDRS, including its overall rating, total risk score, and subscale risk scores for the assessment of financial exploitation and financial decisional abilities.

Financial Decision Making in Older Adults

Traditionally, tests of cognitive ability and general financial knowledge and skills have been used to assess financial decision-making capacity. While it is useful to know that overall cognitive ability predicts financial literacy (Earl, Gerrans, Asher, & Woodside, 2013) and that cognitive decline increases the likelihood of financial exploitation—and even the decision by prosecutors to prosecute the perpetrators (Wood et al., 2014)—general cognition may or may not be related to a specific financial judgment. It is clear that such measures are too limited to accomplish what is needed. Shivapour, Nguyen, Cole, and Denburg (2012) highlight the need for well-validated measures of decision-making capacity in older adults that are tailored to specific decisions. Several newer studies (reviewed below) have investigated actual financial decision making in couples in which one person shows cognitive decline. Study findings demonstrate the value of an assessment tool that offers protection where needed, but also supports autonomy where possible.

Over a 10-year period, Hsu and Willis (2013) examined financial management in couples in which one party had cognitive deficits and found that cognitive impairment—and not cognitive change—was related to greater financial difficulties. Indeed, difficulties with money often preceded the turning over of financial control from the cognitively impaired spouse to the non-impaired spouse; this was usually related to the presence of self-directed financial investments. Nevertheless, 33% of financial respondents in the study continued to be the primary financial decision maker, despite having cognitive scores in the dementia range.

Boyle et al. (2012) and Boyle (2013) examined how cognitive abilities before dementia onset predicted financial decision making five years later, and found that more rapid cognitive decline lead to poorer decision-making abilities (hypothetical mutual fund options), even in participants with Mild Cognitive Impairment. These results are consistent with Marson et al.’s (2009) program of research on the Financial Capacity Instrument. Marson (2001; also see Marson et al., 2009, and Marson & Sabatino, 2012) argues that the impact of age-related dementia (e.g., Alzheimer’s disease) on financial capacity is one of the biggest challenges to financial autonomy.

Although cognitive functioning is an important predictor of decisional capacity, other factors may influence financial decisional abilities. Boyle (2013) points out that financial decision-making capacity differs from executional capacity (e.g., the ability to manipulate money, pay bills, and understand and maintain an accurate checkbook). In nearly 25% of the couples studied, the person with dementia retained decisional capacity even in the absence of executional capacity. This highlights the shortcoming of medical and neuropsychological models of capacity that rely too heavily on the cognitive aspects of decision-making, and illustrates the importance of social factors. Gillen and Kim (2014) found that 23% of the Health and Retirement Survey sample in 2006 and 2008 reported receiving some sort of financial help, and that receipt of financial aid was best predicted by personality rather than cognitive factors. Similarly, Lemaster and Strough (2014) found that risk tolerance in older adults was related to personality traits such as masculinity and femininity, and Mather et al. (2012) found that older adults prefer certainty of gain and are more risk aversive (Tymula, Belmaker, Ruderman, Glimcher, & Levy, 2013).

Financial Exploitation in Older Adults

Acierno et al. (2010) report a national prevalence of 5.2% self-reported financial exploitation in older adults. Conrad, Iris, Ridings, Langley, and Wilber (2010) define financial exploitation of older adults as the illegal or improper use of an older adult’s funds or property for another person’s profit or advantage, and propose six domains of financial exploitation: (a) theft and scams, (b) abuse of trust, (c) financial entitlement, (d) coercion, (e) signs of possible financial abuse, and (f) difficulty managing money. Thefts and scams involve taking an older adult’s monies without permission, either by outright stealing or fraudulent activities (i.e., scams). The second and third most serious acts—abuse of trust and financial entitlement, respectively—imply that the parties have an ongoing relationship.

Several researchers who focus on financial exploitation have stressed the need for ongoing education in capacity determination and more resources for assessment (Nerenberg, Davies, & Navarro, 2012). They also stress that differentiating between financial exploitation and legitimate transactions may be difficult due to some indication of consent by the older adult, such as a signed document or apparent gift. The lack of research on assessment of financial decision-making capacities and financial judgment hinders efforts to formulate policies to address financial exploitation. For instance, Kemp and Mosqueda (2005) discuss the lack of validated assessment procedures for evaluating elder financial abuse, and the importance of a qualified expert to conduct an appropriate assessment.

The Intersection of Financial Exploitation and Financial Decision Making

Appelbaum and Grisso (1988) elaborate on the intellectual factors involved in decision making assessment: choice, understanding, appreciation, and reasoning. These core intellectual factors have been reiterated as fundamental aspects of decisional abilities (ABA/APA, 2008). Although articulated originally for medical decision making, the same intellectual factors apply to financial decisions. First, the older adult must be capable of clearly communicating his or her choice. Understanding is the ability to comprehend the nature of the proposed decision and demonstrate awareness of its risks and benefits. Appreciation refers to the situation and its consequences, and often involves their impact on both the older adult and others; Appelbaum and Grisso contend that the most common causes of impairment in appreciation are lack of awareness of deficits and/or delusions or distortions. Reasoning includes the ability to compare options—for instance, different treatment options in the case of health decisions. It also includes the ability to provide a rationale for the decision or explain the communicated choice.

In assessing financial decision making, professionals must use an approach that balances the desire to protect older adults with the need to enhance autonomy where possible. It is critical, therefore, that valid and reliable tools be available to adequately assess specific financial decision-making abilities, especially as they apply to “sentinel financial transactions,” which are defined as transactions that can result in significant losses or harmful consequences. As discussed above, person-centered approaches to capacity assessment have a long history through the MacArthur studies (Appelbaum and Grisso, 1988) and, more recently, in dementia work (Mast, 2011).

African Americans and Financial Exploitation

A review of the literature in this area reveals little or no research on both financial decision making and financial exploitation in older African Americans, particularly in an urban setting. In creating a participant registry of older African Americans (Chadiha et al., 2011), our group discovered that older African Americans reported financial exploitation within the previous year at a rate two to three times higher than the national average. In this study, using the LFDRS, we focus on this apparently vulnerable group to determine (a) what types of significant financial decisions and financial exploitation were reported, (b) the relationship between the LFDRS and its subscales, (c) the relationship of the LFDRS to neurocognitive and financial ability tests, and (d) whether decisional abilities, as determined by the LFDRS, were significantly related to reports of financial exploitation (i.e., do impaired decisional abilities render an individual more likely to be exploited?).

Method

Procedure

Participants were recruited from volunteers in the Healthier Black Elders Center (HBEC), which is a joint collaboration between Wayne State University’s Institute of Gerontology and the University of Michigan’s Institute of Social Research (Chadiha et al., 2011). Chadiha and colleagues point out that so often African American older adults are under-represented in health and social science research. The Healthier Black Elders Center created a registry of over 1300 African Americans age 55+ to help insure African Americans were more represented in research. Exclusion criterion for participation in the HBEC are (a) not speaking English, (b) hearing difficulties that prevent clear communication over the telephone, (c) inability to understand a short telephone survey due to cognitive difficulties, and (d) living in a nursing home or other institutional setting. After receiving IRB and HBEC approval, trained community volunteers contacted participant registry members who were at least 60 years old and asked whether they would like to participate in an interview and testing session that would last approximately two hours. Since we were not recruiting vulnerable older adults no special arrangements were made regarding safety. If the older adult agreed, a telephone screening was conducted by a trained psychologist or advanced clinical psychology graduate student to ensure that the older adult had a recent or current sentinel financial decision. Financial decisions were considered “sentinel” if they fell into one of the following categories: (a) investment planning (retirement, insurance, portfolio balancing), (b) estate planning (changes in will or beneficiaries, allowing someone access to a bank/investment account), (c) major purchase (home, car, renovations, etc.), or (d) giving a gift. Interviews were conducted at a place of most convenience to the older adult such as the WSU Institute of Gerontology, their home, or a private room at a nearby library or community center.. The average length of time for each interview was just under two hours (approximately one hour for the financial interview, and one hour for cognitive testing).

Participants

Sample sociodemographic characteristics are found in Table 1. Ninety percent were female, and the average age was 70 years (range 60 – 86 years). This reflects a greater proportion of females than in a previous representative study which found that 70% of the older adult cohort in the city was female (Chapleski, 2002), but it is not inconsistent with other studies of older AA adults (Dennis & Neese, 2000; Manly, Byrd, Touradji, & Stern, 2004). Although the average years of educational attainment was 15, the average WRAT-R reading level was 10^th grade. As always with a preliminary study, generalizability is limited and in our study mostly limited to older African American women.

Table 1.

Descriptive Statistics for Sample Characteristics (n = 69)

	% (n)	M (SD)
Age		69.59 (5.99)
Gender
Female	89.9 (62)
Male	10.1 (7)
Education		14.75 (2.48)
WRAT-R Reading Grade Level		10.40 (3.00)

Measures

Lichtenberg Financial Decision Making Rating Scale (LFDRS)

The development of the scale is described in Lichtenberg et al. (2015a). The LFDRS consists of 77 multiple-choice questions with separate subscales that measure Financial Situational Awareness, Psychological Vulnerability, Undue Influence (i.e. susceptibility to undue influence), Past Financial Exploitation, and Intellectual Factors. The scale is a rating scale; similar to something like the Hamilton Depression Rating Scale (Hamilton, 1960) where the older adult is interviewed but the final ratings are made by the professional administering the scale. Two overall scores were produced (1) an overall score for decisional ability, which ranges from 0 (Major Concerns) to 2 (No Concerns). This score is the rater’s overall impression and rating. In our study the final decisional ability score was determined by a consensus conference method similar to that used in cases of Alzheimer’s disease where all three of the team members reviewed each item and came to a consensus on the overall decision making score. There is also an overall risk scoring system that utilizes items (approximately half of all items are used) from all of the subscales as well as a risk score for each subscale. The scoring system for the risk scores uses an algorithm developed by the authors that bases the risk of impaired decisional ability on factors identified in the literature of financial capacity and financial exploitation. Specific information on scoring is available from the corresponding author. Videotaped LFDRS interviews were conducted with five older adults. The older adults were consecutive cases seen by an elder law attorney Inter-rater reliability was established across 10 independent raters by having multiple raters view the videotapes and score the LFDRS. A complete description of the reliability procedures can be found in Lichtenberg et al. (2015a).

Mini Mental State Exam (MMSE; Folstein, Folstein, & McHugh, 1975)

The MMSE, which was used to assess general cognitive ability, contains items that evaluate orientation, memory, concentration, and language and visual skills. The measure is well established and used frequently with older adults, as it can be given in many settings and requires only 5–10 minutes to administer. Higher scores (greater than or equal to 24) on the 30 items indicate intact cognitive functioning, whereas lower scores (less than or equal to 23) indicate the presence of dementia. Research on a sample of community-dwelling older adults similar to those participating in this study found that MMSE total scores demonstrate moderate internal consistency (α = .62) for cognitively unimpaired individuals and high internal consistency (α = .81) for individuals with Alzheimer’s disease (Tombaugh, McDowell, Kristjansson, & Hubley, 1996). The study also demonstrated that the MMSE is more specific for the older adult population than the modified MMSE, because the former also assesses verbal fluency. Furthermore, normative data for the MMSE are available for both urban and rural older adults from Caucasian and African American backgrounds (Marcopulos & McLain, 2003; Marcopulos, McLain, & Giuliano, 1997). These clinical and research findings confirm that the MMSE is an appropriate test for assessing global cognitive functioning in the oldest old population.

Independent Living Scales (ILS) and the Managing Money Subscale (Anderton Loeb, 1996)

The ILS is a 68-item measure of (a) ability to perform instrumental activities of daily living (IADLs), (b) memory and orientation, (c) ability to manage matters related to home and transportation, (d) health and safety knowledge, (e), social adjustment, and (f) financial management. The Managing Money subscale assesses knowledge of concepts such as insurance and Social Security, as well as specific skills such as counting change, calculating a bill, and completing a check or money order. The test is designed to assess functional abilities in individuals over the age of 65 and functional performance in younger individuals (17 years and older) with psychiatric or cognitive deficits. Scores on the ILS demonstrate good internal consistency (full scale Cronbach’s α = .93, individual scale Cronbach’s α = .46 – .90), inter-rater reliability (full scale r = .99), and test-retest reliability (r ≥ .80). Scores on the ILS also demonstrate adequate content, construct, and criterion validity.

Financial Exploitation

Financial exploitation was measured indirectly. We were struck by the fact that several of our questions elicited responses indicative of past financial exploitation. Triggers for learning of financial exploitation included several LFDRS items such as whether they have recently made a financial decision they regret or worry about and whether they have ever lost money through financial decisions. We used follow-up questions to learn the details of any concerns about financial exploitation. Similar to procedures for a diagnosis of Alzheimer’s disease we used a consensus conference procedure to determine if financial exploitation occurred. Financial exploitation in our study included both thefts and scams. For example, we learned about people who hired and paid a workman who never showed up to do the work, and family members who were given access to a bank account to withdrawal $400 and withdrew $5000 and kept the money. All three team members met and reviewed each item and the description of any money loss that might be related to financial exploitation. An example of what was not considered financial exploitation was when someone purchased a home from the city during an auction and had to pay recording or other fees above the price of the purchase. We then rated each person as having or not having experienced financial exploitation within the previous 18 months. For our study we learned only about losses of money and did not learn about losses of land or valuables, and we used self-report descriptions and did not substantiate these.

Data Analysis

To assess percentages of financial exploitation and decisional ability concerns, frequencies were calculated. Frequencies for individual LFDRS item responses were also calculated to characterize participants who had or had not experienced recent financial exploitation. Pearson-r correlation statistics were calculated between the LFDRS subscales: Overall Decisional Ability, Financial Situational Awareness, Psychological Vulnerability, Current Decisional Ability, Past Decisional Ability, and Susceptibility to undue influence to determine whether subtests were measuring unique information. Concurrent validity was evaluated by calculating Pearson-r correlations between the subscales of the LFDRS vs. demographic factors (age, education) and scores on measures of general cognitive functioning (MMSE) and financial skills and knowledge (ILS Managing Money subscale). Finally, we sought to determine whether the LFDRS can distinguish between individuals (a) who have and who have not experienced financial exploitation as determined by the consensus conference ratings and (b) individuals with and without decisional ability concerns as determined by the administering professional making a single decisional ability rating. These ratings also underwent a consensus conference procedure to enhance accuracy. Chi Square analyses were utilized to compare exploited vs non-exploited on financial, psychological and social items related to financial well-being. Independent samples t-tests were calculated to compare exploited vs. non-exploited older adults on age, education, general cognitive functioning (MMSE), financial IADLs (ILS Managing Money subscale), and the six subscales of the LFDRS. Group means were also compared for the LFDRS total score. The same analyses were conducted to compare the performance of individuals with impaired vs. intact decisional abilities. Individuals with examiner ratings of “Some Concerns” or “Major Concerns” were considered to have impaired decisional abilities.

Results

Percentages of Financial Exploitation and Decisional Ability Concerns

Percentages of financial exploitation and of financial decisional ability concerns are summarized in Table 2. Eighteen percent of participants were rated as having experienced at least one instance of financial exploitation within the previous 18 months. More than 11% of the sample demonstrated financial decisional ability concerns as rated by the examiner. Of the eight individuals with decisional ability concerns, five (63%) also reported financial exploitation—in contrast to only 13% of the rest of the sample (8/61). Table 3 provides descriptions of the financial exploitation experienced by each participant, as well as the particular decision for which decisional capacity was deemed impaired.

Table 2.

Financial Exploitation and Decisional Ability Concern Frequencies (n = 69)

	% (n)
Financial Exploitation
Yes	18.81 (13)
No	81.2 (56)
Decisional Ability Concerns
Major Concerns	4.3 (3)
Some Concerns	7.2 (5)
No Concerns	88.4 (61)

Table 3.

Financial Decision and Financial Exploitation Descriptions for Participants with Both Financial Exploitation and Decisional Ability Concerns (n = 5)

	Demographics	Current Financial Decision	Financial Exploitation Description
H008	66-year-old female, 13 years of education	Whether to raise and invest funds to start a group home for individuals with head injuries	Daughter is given money to pay participant’s bills, but pays them irregularly and keeps extra cash
H026	76-year-old female, 13 years of education	Decision to let a trailer property go to foreclosure; home renovations	Cable co. charged her for a service that was advertised as free; daughter uses her car without a license or insurance, though the participant is liable
H048	72-year-old female,12 years of education	Decision to file for bankruptcy	Daughter stole money for drug use
H049	79-year-old female, 12 years of education	Decision to file for bankruptcy	Bank alerted her of “suspicious withdrawals” from her checking account that have still not been refunded
H056	67-year-old female, 12 years of education	Opening an education account for great- niece	Bought a house for a niece and her family with the agreement that the niece would pay the mortgage; niece did not pay and moved out, leaving participant with the mortgage, Insurance and tax payments

Characteristics of Financially Exploited vs. Nonexploited Participants

Table 4 summarizes the frequencies of responses to LFDRS items for financially exploited and non-exploited participants.

Table 4.

Frequencies of Responses for LFDRS Questions: Financially Exploited vs. Non-Exploited Groups

	Financial Exploitation (n = 13)	No Financial Exploitation (n = 56)
	% (n)	% (n)
Current Sources of Income
SS only	15.4 (2)	8.9 (5)
Work Income only	7.7 (1)	0 (0)
SS + Pension/Retirement Fund	69.2 (9)	55.4 (31)
SS + Pension/Retirement Fund + Investment Income	0 (0)	8.9 (5)
Work Income + SS/Other Income	7.7 (1)	19.6 (11)
Other	0 (0)	7.1 (4)
How often do your expenses exceed your income?
Rarely or never	46.2 (6)	62.5 (35)
Some of the time	23.1 (3)	23.2 (13)
Most of the time	30.8 (4)	14.3 (8)
Overall, how satisfied are you with your finances?**	χ2 = 12.2, p = .002
Satisfied	23.1 (3)	41.1 (23)
Neither satisfied nor dissatisfied	15.4 (2)	46.4 (26)
Dissatisfied	61.5 (8)	12.5 (7)
Who manages your money day to day?
I do, without any help	84.6 (11)	96.4 (54)
I get help from someone	15.4 (2)	3.6 (2)
How confident are you in making big financial decisions?**	χ2 = 13.5, p = .001
Confident	23.1 (3)	76.8 (43)
Unsure	69.2 (9)	19.6 (11)
Not confident	7.7 (1)	3.6 (2)
To what extent have you sought assistance or confided in others about financial decisions?
Not at all	30.8 (4)	26.8 (15)
Discussed a bit	53.8 (7)	51.8 (29)
Discussed in depth	15.4 (2)	21.4 (12)
Has there been a change in the way you manage your finances since you’ve gotten older?
No, this is the same way I’ve always managed my money.	61.5 (8)	66.1 (37)
Yes, now I seek more advice from others.	30.8 (4)	33.9 (19)
Yes, I’ve turned over my finances to someone else.	7.7 (1)	0 (0)
How worried are you about having enough money to pay for things?***	χ2 = 14.1, p = .001
Not at all worried	7.7 (1)	41.1 (23)
Somewhat worried	46.2 (6)	50.0 (28)
Very worried	46.2 (6)	8.9 (5)
Do you regret or worry about financial decisions you’ve recently made?**	χ2 = 5.7, p = .017
No	30.8 (4)	71.4 (40)
Yes	69.2 (9)	28.6 (16)
How often do you worry about financial decisions you’ve recently made?*	χ2 = 7.4, p = .061
Never	30.8 (4)	71.4 (40)
Sometimes	23.1 (3)	16.1 (9)
Often	46.2 (6)	12.5 (7)
How often do you feel anxious about your finances?
Never or rarely	30.8 (4)	58.9 (33)
Sometimes	46.2 (6)	33.9 (19)
Often	23.1 (3)	7.1 (4)
In the past few months, how often has anyone asked you for money?
Less than once or twice per month	30.8 (4)	57.1 (32)
Once per week	23.1 (3)	21.4 (12)
Every few days	38.7 (5)	19.6 (11)
Are you financial helping anyone on a regular basis?
No	53.8 (7)	39.3 (22)
Yes	46.2 (6)	58.9 (33)
Have you recently signed a durable power of attorney for finances?
No	92.3 (12)	94.6 (53)
Yes	7.7 (1)	3.6 (2)
Have you noticed any money taken from your bank account without your permission?***	χ2 = 16.5, p = .002
No	46.2 (6)	85.7 (48)
Yes	53.8 (7)	14.3 (8)
Have you recently changed your will?
No	100 (13)	89.3 (50)
Yes	0 (0)	10.7 (6)
Do you have a confidant(e) with whom you can discuss anything, including your financial situations and decisions?**	χ2 = 4.0, p = .045
No	38.5 (5)	14.3 (8)
Yes	61.5 (8)	85.7 (48)

^*p = .06

^**p < .05

^***p ≤ .01

Sources of Income

The majority of both financially exploited and non-exploited participants reported that their income consists of Social Security and pension or retirement-fund payments; however, a greater proportion of financially exploited older adults (15%) relied on Social Security as their sole source of income, compared to non-exploited older adults (9%). Similarly, a greater proportion of financially exploited older adults (7%) relied on work income as their sole source of income, compared to 0% in the non-exploited group. Twenty percent of the non-exploited participants relied on work income plus Social Security, compared to only 7% of the exploited participants. These differences were non-significant between groups.

Money Management

The majority of participants in both groups managed their own finances independently, and had not changed how they managed their finances as they aged. The groups had similar percentages of seeking assistance or confiding in other people regarding finances. A larger proportion of the non-exploited group (63%) reported that their expenses rarely exceeded their income than the exploited group (43%) though this difference was non-significant. The majority of financially exploited older adults (62%) reported being dissatisfied with their finances, while the majority of non-exploited older adults endorsed being satisfied with (41%) or neutral about (46%) their finances (X²= 12.2; p<.05). Seventy-seven percent of non-exploited individuals stated that they were confident about making big financial decisions, while 77% of financially exploited respondents reported that they felt unsure or not confident about making big financial decisions (significant difference between groups: X²= 13.5; p<.05).

Concerns about Finances

Forty-one percent of non-exploited older adults reported that they were not at all worried about having enough money for their living expenses, compared to only 7% of financially exploited participants. The groups had similar percentages of participants who were somewhat worried about having enough money. Forty-seven percent of financially exploited older adults reported being very worried compared to only 9% of non-exploited participants. Overall these percentages were significantly different between groups (X²=14.1; p<.05). Seventy percent of exploited participants endorsed feeling worried about or regretting recent financial decisions or transactions, vs. 29% of non-exploited participants (X²=7.4; p<.05). Thirty-one percent of exploited participants reported rarely or never feeling anxious about their finances, while 46% endorsed feeling anxious sometimes and 23% reported feeling anxious often. In contrast, 60% of non-exploited participants reported rarely or never feeling anxious about their finances, 34% reported feeling anxious sometimes, and only 7% reported feeling anxious often. These differences were non-significant.

Risks for Financial Exploitation

A greater proportion of the financially exploited group reported being asked for money once or more per week (62%), compared to 41% of non-exploited older adults (non-significant difference). Fifty-four percent of exploited individuals acknowledged money being taken from their accounts without their permission, while only 14% of non-exploited individuals reported this type of theft (X²=16.5; p<.05). Exploited participants were no more likely than non-exploited participants to be providing financial help to someone on a regular basis. The two groups were relatively commensurate in terms of recently changing a will or signing a durable power of attorney for finances (these actions were rare in both groups). The two groups were also similar in percentages of social activity; all participants in the study endorsed talking or meeting with a friend or family member at least once per week. However, over one-third of the exploited participants reported having no confidant(e) (38.5%) and only 14.3% of the non-exploited participants reported lacking “a confidant(e) with whom you can discuss anything, including financial situations and decisions.” (X²=4.0; p<.05).

Inter-correlations of the subscales and overall LFDRS

Inter-correlations among LFDRS subscales are presented in Table 5. Overall Decisional Ability was significantly negatively associated with Financial Situational Awareness, Psychological Vulnerability, Current Decisional Ability, and Susceptibility to undue influence. Financial Situational Awareness was also significantly positively associated with Psychological Vulnerability and Susceptibility to undue influence. Psychological Vulnerability was also significantly positively correlated with Susceptibility to undue influence. The Past Decisional Ability subscale was not significantly associated with any other LFDRS measure.

Table 5.

Correlations between LFDRS Subscales (n = 69)

		1	2	3	4	5	6
1. Decisional Ability	r p		−.304** .003	−..210* .042	−.364** .001	.095 .382	−.221* .032
2. Financial Situational Awareness	r p			.388** .000011	.171 .059	.085 .361	.284** .001
3. Psychological Vulnerability	r p				−.047 .611	.167 .078	.266** .003
4. Current Decision Total	r p					−.070 .473	.066 .473
5. Past Decision Total	r p						.158 .094
6. Undue Influence	r p

Note.

^**significant at α =.005 level

^*significant at α =.05 level

Concurrent Validity of the LFDRS

Table 6 summarizes the relationships between LFDRS subscales and age, education, MMSE score, and ILS Managing Money score. Education was significantly positively associated with MMSE and ILS Managing Money subscale scores. Overall Decisional Ability was significantly positively correlated with education, MMSE score, and ILS Managing Money score. Higher decisional abilities were significantly related to better cognitive and money management scores. The Current Decisional Ability risk score was significantly negatively correlated with MMSE and ILS Managing Money subscale scores. Higher risk scores for the Current Decision subscale was related to lower cognitive and money management scores. Psychological Vulnerability, Past Decisional Ability, and Susceptibility to undue influence subscale risk scores were not significantly associated with demographic factors, general cognitive functioning, or money-management abilities.

Table 6.

Validity Table: Correlations between LFDRS Decisional Ability and Subscale Scores, Demographic, Cognitive, and Functional Variables (n = 69)

		Age	Education	MMSE	ILS Money Mgmt.
Decisional Ability	r	.126	.235*	.327**	.254*
	p	.209	.026	.002	.013
Financial Situational Awareness	r	−.053	−.124	−.084	.043
	p	.542	.168	.363	.623
Psychological Vulnerability	r	−.024	−.098	.004	−.001
	p	.789	.285	.965	.987
Current Decision Total	r	.163	−.011	−.226*	−.204*
	p	.071	.905	.020	.026
Past Decision Total	r	−.019	−.062	−.061	−.037
	p	..842	.524	.539	.696
Undue Influence	r	..040	−.028	.026	−.054
	p	.649	.762	.783	.545
Age	r			−.101	−.080
	p			.275	.360
Education	r			.254*	.240**
	p			.009	.009

Note.

^**significant at α =.005 level

^*significant at α =.05 level

Distinguishing between Financially Exploited vs. Non-exploited Older Adults

Financially exploited older adults were not significantly different from non-exploited older adults in terms of age or education, but they performed significantly more poorly on a measure of general cognitive functioning than non-exploited older adults (t = 2.27, p = .041). The two groups were not significantly different in terms of performance on the ILS Managing Money subscale (t = 1.57, p = .133). The groups were also compared in terms of overall LFDRS rating and subscale risk scores. Financially exploited individuals had lower Overall Decisional Ability ratings (t = 2.31, p = .039) and higher risk scores for Financial Situational Awareness (t = −3.98, p < .001), Psychological Vulnerability (t = −2.94, p = .005), Current Decisional Ability (t = −3.83, p < .001), and Susceptibility to undue influence (t = −2.47, p = .028). They also scored significantly higher than non-exploited individuals on total LFDRS risk score (t = −4.23, p = .001). The groups were not significantly different in terms of Past Decisional Ability (t = −1.39, p = .171). These results are summarized in Table 7.

Table 7.

Independent Samples t−Tests: No Financial Exploitation (n = 56) vs. Financial Exploitation (n = 13)

		M (SD)	t	df	p
Age	No Financial Exploitation Financial Exploitation	69.14 (5.81) 71.54 (6.60)	−1.31	67	.196
Education	No Financial Exploitation Financial Exploitation	14.91 (2.53) 14.08 (2.18)	−1.09	67	.277
MMSE	No Financial Exploitation Financial Exploitation	28.84 (1.23) 26.69 (3.35)	2.27	12.76	.041*
ILS Money Management Subscale	No Financial Exploitation Financial Exploitation	28.91 (3.95) 27.08 (3.75)				1.57	67	.133
Decisional Ability Score	No Financial Exploitation Financial Exploitation	1.95 (.227) 1.38 (.870)	2.31	12.38	.039*
Financial Situational Awareness Score	No Financial Exploitation Financial Exploitation	19.79 (4.52) 25.46 (5.11)	−3.98	67	.00017**
Psychological Vulnerability Score	No Financial Exploitation Financial Exploitation	11.16 (2.76) 13.85 (3.81)	−2.94	67	.005**
Current Decision Total Score	No Financial Exploitation Financial Exploitation	7.54 (2.04) 11.62 (6.91)	−3.83	67	.000282**
Past Decision Total Score	No Financial Exploitation Financial Exploitation	4.21 (1.84) 5.00 (1.87)				−1.39	67	.171
Undue Influence Score	No Financial Exploitation Financial Exploitation	9.39 (3.22) 15.77 (9.18)	−2.47	12.69	.028*
Total LFDRS Score	No Financial Exploitation Financial Exploitation	52.08 (9.00) 71.69 (16.12)	−4.23	13.78	.001**

Note.

^**significant at α =.005 level

^*significant at α =.05 level

Distinguishing between Individuals with Intact vs. Impaired Decisional Abilities

Older adults with intact or impaired financial decisional abilities were not significantly different in terms of age, but intact individuals were more highly educated than impaired individuals (t = −3.82, p = .001). Older adults with impaired decisional abilities performed significantly more poorly on a measure of financial knowledge and skills than older adults with intact decisional abilities (t = 2.53, p = .014). The two groups were not significantly different in terms of performance on the MMSE, though there was a trend toward the intact group’s scoring higher on this measure (t = −2.32, p = .053). The groups were also compared in terms of their performance on the LFDRS subscales. Individuals who had decisional ability concerns had higher risk scores for Financial Situational Awareness (t = 4.19, p < .001), Psychological Vulnerability (t = 2.40, p = .019), and Susceptibility to undue influence (t = 2.58, p = .012); and Current Decisional Ability risk scores (t = 3.15, p = .016). Individuals with impaired financial decisional ability also scored significantly lower than individuals with intact financial decisional ability on total LFDRS risk score (t = 5.41, p < .001). The groups were not significantly different in terms of Past Decisional Ability (t = −.996, p = .323). These comparisons are summarized in Table 8.

Discussion

This study provides preliminary evidence for the validity of the LFDRS in assessing financial decisional capacity and financial exploitation. The LFDRS was created primarily to assess decisional capacity; in this study we investigated its concurrent validity with a measure of overall cognitive functioning and a more traditional financial capacity measure. Both the overall rating and the scale’s risk scoring proved to be related to the cognitive and financial capacity tests, but was in no way redundant. Decisional abilities, which consist of the ability to communicate one’s choice, understanding, appreciation, and rationale/reasoning, are the cornerstone of informed decision-making skills. Impairment in decisional abilities is strongly linked to impaired capacity (see Lichtenberg, Qualls, & Smyer, 2015b). The LFDRS is a unique method of assessing financial decisional abilities for significant or sentinel financial decisions or transactions by adopting a person-centered approach, which recognizes that for each decision, context matters. A person’s history, psychological stability or vulnerability, and values may all affect decisional capacity and abilities—and this includes people with dementia.

This study not only examined financial decision making in a unique way, but also with a population seldom studied: older urban African Americans. The sample consisted of financially stressed individuals. The types of major decisions demonstrate the financial difficulties participants had experienced and included, for example, decisions about whether to declare bankruptcy, refinance a home, reduce debt on credit cards, purchase a new home for another person, or make a major purchase such as a new car. Participants’ average reading level was four years below their stated grade level, reflecting the quality of education they received as children, but the average MMSE score was within normal limits. MMSE and ILS scores were significantly related to the overall rating of decisional abilities and the subscale risk score for the, current decision. MMSE and ILS scores were unrelated to the other subtests of the LFDRS. When comparing those rated as having decisional ability concerns and those rated as not, education and MMSE and ILS scores differentiated between the two groups, as did four of the five subscale risk scores from the LFDRS (Table 8).

A rich picture emerged with regard to the LFDRS and its ability to detect financial exploitation, one that allows us to better understand a root cause of this complex problem. Decisional abilities, when impaired, may be one of the greatest risk factors for financial exploitation of older adults. This makes sense conceptually, and is supported by our data. Sixty-three percent of those with impaired decisional ability reported financial exploitation, compared to 13% of the rest of the sample. Interestingly, the nature of the LFDRS may help decrease the problem of underreporting financial exploitation. Information about financial exploitation came from a number of different questions across the survey; those reporting financial exploitation perceived themselves as more vulnerable financially, psychologically, and socially, and were more likely to report behaviors related to risk of financial exploitation, such as having money withdrawn from their bank account without permission. Those reporting exploitation were also less confident in their decision making, less satisfied with their finances, more worried about money, and more likely to lack a confidante. They were not, however, more likely to be providing financial help to someone on a regular basis.

LFDRS and MMSE scores were significantly different for people who had experienced financial exploitation during the previous 18 months vs. those who had not. Notably, almost all of the LFDRS subscales, as well as the overall decisional ability score, differentiated the two groups. The subscales’ ability to differentiate the two groups with regard to exploitation, much like their ability to differentiate based on decisional abilities, provides support for the importance of the contextual variables (i.e., Financial Awareness, Psychological Vulnerability, and Susceptibility to undue influence) in the assessment of decisional ability and financial exploitation.

There are a number of limitations to the current study. First, the sample size is relatively modest (n=69) and full analyses on items and underlying factor structure of the scale is impossible. This study is a preliminary validity study; we plan to diversify the sample and collect 200 LFDRS measures, along with the other measures. As a preliminary study, enthusiasm for the results must be tempered; a larger data collection will provide richer information. Second, our sample consisted of mostly women and by design all African Americans. Thus the results have limited generalizability. Third, the measurement of financial exploitation is indirect and somewhat crude. The LFDRS was not created to be a measure of financial exploitation and yet it proved to be sensitive to this issue. Further, these are only self-reported data on financial exploitation and not substantiated in any way. Nevertheless, this is the biggest financial decision making/financial exploitation data collection among urban African Americans that we are aware of, and the results are instructive.