Ten Tips for Avoiding Investment Fraud and Abuse in Your Golden Years – Part Two
~ By Gerald Rome, Acting Securities Commissioner ~
In the first installment of this three part series we discussed how older Americans are frequently targeted by investment con artists and abusive stockbrokers and financial planners. We also covered three tips that you can follow to help yourself avoid becoming a victim. These tips included 1) not being a courtesy victim, 2) checking out strangers touting strange deals, and 3) staying in charge of your money. In part two we’ll examine three more tips that you can follow to help protect yourself and your hard-earned money.
4. Never judge a person’s integrity by how they “sound.” Many older Americans who have been cleaned out by a con artist later explain that the perpetrator “sounded like such a nice young man (or woman).” The most successful con artists sound extremely professional and can make the most speculative investments sound as safe as placing money in the bank. Some swindlers combine professional-sounding sales pitches with extremely polite manners, knowing that many older Americans are likely to equate good manners with personal integrity. However, the sound of a voice (especially on the phone) has no bearing on the safety of an investment.
5. Watch out for salespeople who prey on your fears. Con artists know that many older Americans are afraid that they will either outlive their savings or see all of their wealth disappear as a result of some catastrophic event, such as a costly hospitalization. So, many shady salespeople will pitch their schemes as a way to build up your life savings to the point where such fears are no longer necessary. Don’t forget that fear and greed can cloud your good judgment and leave you in a much worse financial position. The right investment will make sense because you understand it and are comfortable with the degree of risk involved.
6. Exercise particular caution if you are an elderly widow. If you ask a con artist to describe their ideal victim, they are likely to say the following two words: “elderly widow.” Unfortunately, many women who are now in their retirement years received little or no education about how to handle money and often relied on their husbands to make most of the major financial decisions. Thus, older women (especially those who have received a windfall insurance payment as a result of the death of a spouse) are prime targets for con artists. Elderly citizens who are on their own and have little working knowledge about handling money should always seek the advice of family members or a disinterested professional before deciding what to do with their savings.
Following these tips will help protect you, and your savings, from untrustworthy con artists and devious “financial professionals.” Keep an eye out for next month’s edition of Prime Time for Seniors for the final four tips to avoid investment fraud and abuse.