After my last article on senior-marketing fraud, I started digging further into the problems seniors face. I receive a lot of periodicals for financial planners, and many of those are starting to expose some of the marketing deception targeting seniors.
I also went on the Internet and found an abundance of information on this subject. I like to think that I am keeping up on changes in the industry, but the things that I discovered since my last article are quite troubling.
I addition to Internet fraud, I discovered books and seminars targeting seniors to buy financial products that are supposed to address their special needs. The words "guarantee" and "cannot outlive" were thrown around to play on the fears of seniors outliving their money.
These products, many of which are insurance or annuities, appear to have only the special interests of the salesperson in mind. Don't get me wrong about insurance and annuities: they have an important place in many financial plans, but they are not a one-size-fits-all solution to the problems that seniors face today. There are many different structures with dramatically different fees.
Regulators are starting to turn the spotlight on companies that specialize in using high-pressure tactics to sell financial products and services to older Americans. There are firms out there with detailed scripts and marketing material designed to intimidate the elderly. I have many older folks as clients, and what I have found is that they are very trusting and courteous. They are from a generation that was taught to be nice at all times and have good manners. This makes them targets for fraud and abuse.
So what pointers can seniors use to ensure that they won't fall victim to some of these scams? After doing a lot of research on the subject of financial fraud and abuse, I have developed some tips for older Americans to use when they are approached by someone offering to provide them with "the perfect solution" to all of their financial problems and fears.
• Don't be a courtesy victim. It is OK to say no to someone who calls you and wants you to invest your money in something that your current adviser has never suggested.
Regard strangers with the utmost caution, even if they say that they are a "senior" expert. Don't be swayed by someone pointing out all of the mistakes that your current adviser has made or things that they have overlooked. This is a ploy to create fear and anxiety. Also be wary of anyone that asks you not to consult your children or someone that you trust about making a decision on financial matters.
• Check out strange deals. I see these in the paper periodically and wonder myself how anyone can offer double-digit interest with no risk. Never make an immediate decision on anything without checking out the salesperson and firm.
• Don't have someone take complete charge of your money and never consult you on anything. Don't invest in something that you cannot understand. Make sure that the investment being suggested makes sense and that you understand the risk as well as the reward of that investment.
• Don't be fooled by people who "sound good." Anyone can memorize a script and be able to sound quite competent with very little knowledge or training.
How a person sounds has no bearing on the soundness of the investment. You should verify that a person is licensed in your state with the appropriate regulatory agency for the products that they are selling.
• In the financial-services industry, there is fear and greed. Don't let anyone prey on either of these emotions. I have heard the stories about how you can lose all of your life savings and be homeless if you do not invest in a certain product or service.
Seniors have a fear of outliving their assets and having to rely on family. This fear can be used by swindlers to sell seniors peace of mind at a high price.
• Be very careful if you are a widowed/divorced senior and your spouse handled all financial affairs. I see a lot of older women in this position.
The husband handled everything, and now that they are widowed, the finances are now their responsibility. This can be very intimidating, so ask your senior friends for referrals to a trustworthy adviser.
• Ask questions. Do not be afraid to speak up and say that you do not understand something. Look at your monthly statement and if you see something amiss, call the adviser.
We may not always have the answer immediately, but a good adviser will get the answer and make it understandable in language that you can relate too.
• Beware of any investment that makes it difficult to cash out or retrieve principal. I am not talking about regular early-withdrawal or surrender fees, but a complete lack of liquidity. You should be able to get your money back, sans fees or market fluctuation, in a relatively short period.
• Don't let embarrassment keep you from reporting anything fishy. You won't be seen as incompetent to take care of your affairs if you report that you have been a victim of a fraud. Reporting is the best way to stop these swindlers from victimizing others.
• Don't let someone convince you that they can make up your losses or cover financial shortfalls. I know that we would all like to recoup our losses over time, but there is no guaranteed way to do this. There is no quick fix, so the old "sounds too good to be true" adage applies here.
So, that is my top 10 . I hope that you will keep them in mind when your are approached by someone either on the phone or at a seminar. You are the first line of defense when it comes to protecting your assets against unscrupulous salepeople. If you happen to recognize that you have been a victim of any of these scams, contact your state regulatory agency.
If you would like to learn more on how to protect yourself against senior financial fraud and abuse, give us a call at 841-4277 or e-mail questions to carol.perry@lpl.com.
• Carol Perry, of Carol Perry and Associates, has been a resident of Northern Nevada since 1983.