The most common types of financial scams that target the elderly try to steal tax refunds or social security benefits. Elders often receive constant calls or emails related to other kinds of scams. Yet, broker misconduct defrauds elders in ways that are far less obvious and far more damaging.
How to recognize broker misconduct?
You can find out if an elder in your life is being defrauded most easily by regularly speaking with your loved one. In those conversations, you may learn something suspicious about their relationships with brokers or other actions they have taken.
With elderly clients, it is sometimes relatively easy for a broker to commit fraud of this kind. Some other signs can be:
- New advisors: While anyone may begin speaking with an unknown broker or financial advisor at any time, the spontaneous introduction of a new advisor can be cause for suspicion.
- New money rules: Many elderly people have adjusted their lifestyle and spending habits to ensure that they have sufficient savings to meet their future financial needs. As the population ages more and more people will be retiring and many of these people are vulnerable to predatory brokers. If an elderly loved one suddenly starts “investing” money in unconventional investment vehicles or “loans”, it is time to ask questions.
- Lifestyle changes: If a generous and open relative is suddenly much more frugal or vice versa, it could be due to a sudden change in their financial circumstances. Or the impression of one.
If you see these factors in your loved ones, taking a moment to speak with them and understanding the sudden changes can allow you to protect your family from an unscrupulous actor.
Verify and watch
Many elderly investors believe that a financial broker is inherently worthy of their trust simply because they appear to be a fiduciary. As a fiduciary, a person must act in the best interests of their clients and is liable if they do not. The feeling of security in dealing with a broker in this manner overlooks the fact that not all brokers are fiduciaries and fiduciary duty does not bar a person from malpractice.
To protect your family, you may need to take additional steps to verify the credentials of new advisors and watch their work closely. If you suspect someone is taking advantage of your elderly relatives, you may need to consult with an attorney to act.