One in Five Over 65 Have Been Financially Exploited
Don Blandin, the CEO for Investor Protection Trusts, says that more and more of our elderly are subjected to financial abuse or financial exploitation. These numbers continue to rise with the aging of America and the constant search by seniors for investments that will help to make their retirement savings last longer in times of volatile markets and low interest rates. That combination makes the elderly easy prey for unethical advisers or scammers. In fact, a study by Investor Protection Trusts revealed that "millions are in danger of being exploited and one in five people over the age of 65 already have been exploited."
People who prey on senior citizens knows that they are easily influenced, very trusting, don't ask too many questions and if selling to a group they are largely followers. Vigilance is the key and there are several things to be on the lookout for:
- Beware of any investment vehicles that are not totally liquid. If there are any limitations on being able to immediately access your funds on short notice, sat away from them. An expert on security fraud and the author of the Investor's Guide to Loss Recovery, Louis Straney advises "when presented with an investment proposal, seek the guidance of a third party who has no vested interest in your decision and be very cautious with any investment that limits your ability to access the funds for unexpected personal or medical emergencies."
- Don't get caught up in a sales pitch requiring you to "act now or you may miss your chance," "this is a once in a lifetime offer" or any other sales pitch that requires immediate action without time to think about what you are doing. Basically, the old standard rule "if it is too good to be true, then it usually is" applies to being rushed into an investment decision.
- Beware of free lunches and dinners. Some unethical advisers or con artists will use this to make you feel obligated to make investments because you came to the seminar and had a free meal.
- Don't make investment decisions on the fact that the advisers have fancy offices or drive fancy cars. These are ploys used to make elderly investors feel that their money will be secure and in good hands. Louis Straney says "Office location is of little importance and that cosmetic issues are a distraction to the tasks at hand. The critical issues are the training, supervision and motivation of the adviser."
- More importantly, consideration should be given to the adviser's background and qualifications, whether investors have access to key managers and the breadth of products and services the broker is offering, according to Straney. If you do not feel comfortable or qualified to ask these questions of the adviser, then get some uninterested third party to assess the background and credentials of the broker as well as the investments being proposed.
- Beware of "cold calls", direct mail offering investments "especially for investors over 65" and advisers who target social clubs and organizations for those over 65. Remember to stay vigilant.
- Some of the top scams being perpetrated on seniors over the last year or so have involved energy, precious metals, distressed real estate, promissory notes and securitized life settlement contracts, where investors are sold a piece of someone else's life insurance policy. Often times, elders are preyed upon with investment offerings connected to recent newspaper headlines, causing them to feel like they are more familiar with them and causing them to act more quickly.
- Elderly women between the ages of 80 and 89 are prime targets, especially those who live by themselves and need assistance with their daily activities, according to the MetLife Institute. These individuals are easy marks for scammers who feel like they can be easily persuaded and often have nobody overseeing their investments. Schemers make some $3 billion off of this group alone.
According to a recent study conducted by AARP, there are firms that openly address the issues faced when dealing with elderly investors who have diminished capacity and have supervisory procedures in place to protect them. Unfortunately, there are many that do not. One thing that seems to be universally used for those with diminished capacity is a financial power of attorney for someone to monitor and trade the elder's account. Although there is considerable disagreement about holding all transactions entered by elderly investors, the majority of the firms do, with one third holding only the trades that were detrimental to the investor and only one third that felt it to be necessary. The study concluded that firms ought to train their investment professionals on dealing with the elderly or those with diminished capacity. Unfortunately, most do not.
If you have elderly family members, neighbors, co-workers or friends that have been the target of elder financial abuse, please contact our securities law firm at 1-800-259-9010 for a confidential, no obligation consultation concerning their rights and remedies.