I detest crooks. But when they are in my line of work (the financial industry), I detest them even more. My ultimate vitriol is reserved for the financial scammers who prey on older people. They are among the lowest forms of life on the planet.
They are everywhere.
Recently, the website lifehealthpro.com released results from a study of victims of financial fraud, in which they identified some surprising attributes of fraud victims.
- Surprisingly, the findings did not depict an under-educated or naïve elderly citizen as the foremost fraud victim.
- Fraud victims were NOT primarily female, dispelling the notion that grieving widows were the most vulnerable Americans (note, though, that widows are a target market for annuity and life insurance vultures).
- The profile identified higher-income, educated males as being most susceptible to becoming victims of financial fraud.
Most of us consider ourselves sophisticated enough and wary enough to avoid these scams, right? If we are all so smart, then the scams should not be profitable, right? So, how large is the problem? According to the study:
- The research showed that, in any 5-year period, 37% of all seniors are affected, and the total tab is $36.5 Billion.
- Of the total, $17 Billion is lost to financial exploitation,” defined as the use of misleading language and social pressure to take advantage of memory deficiency or loss.
- $13 Billion is lost to blatant illegal activity, including the decades-old Nigerian scam.
- $7 Billion is lost to deceit and theft by caregivers (this is one of my biggest pet peeves, as I have personally witnessed this one) – this can include family members, lawyers, accountants, financial managers and personal friends.
What are the characteristics of someone who is more vulnerable to fraud than most people? Here are some results of the study:
- Susceptible people prefer unregulated investments, looking for the big return, and often they are open to sales pitches and taking risks. Perhaps strangely, they describe themselves as being conservative.
- Many of these people take random phone calls from salespeople (often scammers), they make several investment decisions each year, and they respond to commercials on TV or in print.
- The primary demographic is older married men, who are often military veterans.
How does the average person avoid being ripped off? If you fit into this profile, or if you know someone who does, or even if you are generally concerned about the problem (we all should be), here are some tips:
- Invest only with Registered Investment Advisors (fee-only, Certified Financial Planners).
- Avoid responding to phone calls, email, and television ads.
- Get on every “Do Not Call” list you can find.
- Never give out personal information, on the phone or online unless you initiate the exchange.
- Be wary after a life event such as losing a spouse.
Please be especially vigilant with the people you know, whether family, friends, neighbors, or colleagues. When signs of memory trouble occur, take action. $36.5 Billion is a terrible loss. Do your part, for yourself and others. And tell your loved ones to please keep an eye on you.
Scammers would not exist if they weren’t successful at scamming the public.
Van Wie Financial is fee-only. For a reason.