Five Simple Tips To Help Seniors Avoid Investment Fraud
A recent poll by the Investor Protection Trust, a non-profit devoted to investor education, found that almost 60% of respondents — all professionals who work with the elderly — deal with elderly victims of investment fraud “quite often” or “somewhat often.” The respondents included state securities regulators, financial planners, medical professionals, social workers, caregivers, and law enforcement officials, among others.
People over 65 are targeted by fraudsters because “they have a lot more money, relatively speaking,” said Kathleen Quinn, executive director of the National Adult Protective Services Association. “Older people have done better financially than younger people, and that’s a big temptation.” A June 2011 study by MetLife found that about $2.9 billion is lost annually due to elder financial abuse.
What can you do to protect yourself if you’re a senior? Here are five simple tips.
- Do not respond to any solicitation by mail, by e-mail, or by phone from any organization with which you are not personally familiar. Many fraudsters are accomplished actors with stories that can be very compelling.
- Avoid non-publicly traded investments promising high returns with little or no risk. If the risk really was low, they wouldn’t need to offer you such a high return to get you to give them your money.
- Avoid working with investment professionals that focus on returns. The role of a financial planner should be to help you make sound financial decisions and to manage the risk of your investments. No one has any control over investment returns unless the market is rigged.
- Get help! Consult with your financial planner or adult children or a trusted friend before making investment decisions.
- Do not believe anyone who purports to be able to predict the future of investment prices. As John Kenneth Galbraith puts it, “We have two kinds of forecasters: those who don’t know and those who don’t know they don’t know.”