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Signs of Elder Financial Abuse by a Investment Advisor

A rogue advisor when asked by a reporter about why he targeted seniors, answered: “Because that’s where the money is.” Senior investors are becoming an

A rogue advisor when asked by a reporter about why he targeted seniors, answered: “Because that’s where the money is.”

Senior investors are becoming an increasingly large percentage of those utilizing the services of financial services firms, investment advisors, insurance agents, and brokerage firms.

One of the main reasons why seniors are a popular target of advisor abuse is that many of them have money accumulated and saved after many years of hard work. This is the nest egg that is supposed to support them after they retire, which is why older people are conservative investors who cannot take on much risk.

As the senior population grows, exploitation will continue to increase. Unfortunately, the senior population is also suffering from increasing amounts of diminished capacity /cognitive decline like dementia and Alzheimer’s disease. The sad reality is, seniors, especially those who are vulnerable as a result of cognitive decline, are all too often victims of financial exploitation by financial advisors.

Older investors remain one of the most vulnerable populations at risk of becoming the victims of financial frauds and investment losses. Sometimes, the perpetrator is a family member, a friend, or another trusted adult, such as a caregiver or a guardian. In other instances, the fraudster may be a financial advisor. This is someone with a duty to act in the senior investor’s best interests and whose job is to properly oversee and invest the client’s individual retirement accounts or other savings while keeping their money safe.

Here are some signs that you may be the victim of financial exploitation by a financial advisor:

  • Added account holders or beneficiaries to bank or brokerage accounts
  • Closing or transferring long-established bank or brokerage accounts
  • Recent significant financial losses
  • Unexpected changes to legal documents, such as will or Power of Attorney 
  • Unexplained transfer of assets or cash
  • Excessive trading which may indicate the advisor is trading to generate commissions rather than achieving your investment goals
  • Request to loan money to the advisor 
  • Transactions you did not authorize
  • Sale of products outside of the brokerage 
  • Focus on new stock issues, complex products 
  • Excessive proportion of an investment portfolio in a single stock or asset class
  • Use of margin to borrow money from the brokerage firm to purchase additional investments with added commissions 

If you notice any of these signs of financial exploitation, contact the Dealer’s management and/ or a lawyer.

Why are seniors the target?
Many of the following vulnerabilities apply to seniors:

  • Cannot read fine print of prospectuses or agreements
  • Do not understand underlying conflicts-of-interest- blind trust in advisor
  • Are on pain killers so not great listeners
  • Lower attention span so they don’t ask questions
  • Relatively insensitive to fees; very trusting of and dependent on advisor
  • Some show early signs of dementia or just plain memory aging
  • May have mobility issues so cannot meet with advisor
  • Does not understand that certain transactions are “off book “
  • Lonely, so loan money to a “friend” advisor who makes the request
  • With no family, name advisor as a beneficiary or POA
  • Analytical skills diminished with age so do not review statements
  • Do not question unauthorized trades or account churning – have other things on their mind
  • Do not understand importance of KYC so signed on as higher risk investor
  • Do not have energy to file and pursue a complaint
  • Do not have drive, time or knowledge to use OBSI when dissatisfied with a complaint response
  • Socially isolated, have no one they can count on to discuss concerns/ issues
  • Cannot use technology to double check advisor claims and representations

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