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Survey: Most Seniors Are Vulnerable to Investment Fraud and Exploitation

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Nearly eight in 10 seniors are vulnerable to investment fraud and financial exploitation, according to a new survey.

Investor Protection Trust and Investor Protection Institute, Washington, published this finding in a survey of 756 experts conducted in response to questions posed by the Consumer Financial Protection Bureau. The online poll—of state securities regulators, financial planners, health care professionals, social workers, adult protective services, law enforcement officials, elder law attorneys, academics and others—found that 78% of older Americans are “very vulnerable” to investment fraud/financial exploitation.

About two-thirds of the experts surveyed deal with elderly victims of investment fraud/financial exploitation. Three out of four experts said that such swindles are a “very serious” problem in America today.

The top three financial exploitation problems identified by the experts are:

  1. “Theft or diversion of funds or property by family members” (79%);
  2. “Theft or diversion of funds or property by caregivers” (49%);
  3. “Financial scams perpetrated by strangers” (47%).

As for “financial education, counseling, or personal finance management programs best tailored to the financial needs of older Americans and their families or caregivers,” the experts identified the following:

  1. “Programs delivered by local professionals, such as caregivers, adult protective services workers, law enforcement agencies, and health care professionals” (71%);
  2. “Programs delivered through senior centers and other facilities catering to older Americans” (65%);
  3. “Programs delivered by senior oriented national and local organizations” (55%).

Over half of respondents (53%) said that “the available resources for seniors when selecting a financial advisor with appropriate knowledge to address their specific financial needs” are either not very effective or not effective at all. Under a third (30%) said the resources are somewhat effective or very effective.

Among the study’s other key findings:

  • Half of respondents (51%) said that “veterans/military retirees face basically the same [fraud and deception] risks as other older Americans.”
  • According to the experts, the best practices “in providing seniors financial literacy and robust, practical information on personal finance management” are:  (1) availability primarily in person (71%); (2) measurement of results in terms of improved awareness/understanding (52%); and (3) availability in person and via the internet (35%).
  • Nearly three in five (58%) said seniors are “not very able” or “not able at all” to determine “the legitimacy, value, and authenticity of credentials held by their financial advisors and planners.” 
  • By a margin of 36% to 26%, the experts said that “current efforts for maintaining the legitimacy, value, and authenticity of credentials held by financial advisors and planners” are “not very effective” or “not effective at all”.
  • About six in 10 (59%) think existing accountability controls are not effective “when it comes to deterring the misuse of ‘senior advisor credentials’.”

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