Senior citizens have always been easy targets for unscrupulous predators looking for a fast buck from an unsuspecting victim. Many of them are lonely and easily deceived by con artists playing off their hunger for attention.
According to regulators, there are a growing number of financial planners who got into the business during the 1980s and are now seniors themselves. Some of them are beginning to engage in unethical behavior when it comes to their older clients.
Whether it's because many of them saw their own portfolios devastated in the financial meltdown, or that they can no longer afford to retire, regulators say something has triggered a rise in fraud committed by seniors against seniors.
Seniors at risk
Researchers at the Georgia Institute of Technology conducted a study in 2008 and found that older adults are significantly worse than younger people at detecting whether someone who may have stolen money is telling the truth.
A different study by Harvard University economist David Laibson found that the typical person's ability to make astute financial decisions peaks at about age 53, and then deteriorates slightly each year until age 70, when it basically drops off a cliff.
The phonies
According to an article in the Wall Street Journal, some older financial advisers are using their age as a selling point, and telling clients they understand the challenges that older investors face. Prosecutors say that in many instances, unscrupulous advisers also tout their professional designations, or credentials, as further evidence of their expertise.
Professional credentials have become popular among financial advisers in recent years. Some are difficult to obtain, but many of the newer ones can be obtained easily, often with little or no study and just a few hundred dollars.
The Journal has identified more than 200 credentials available to financial-services professionals, including at least six with the word "senior" in their name: certified senior adviser; certified senior consultant; certified senior specialist; certified senior financial planner; chartered senior financial planner; and chartered adviser for senior living.
Some advisers find that credentials are so effective in winning new clients that they don't even need to keep the designation current.
The certified financial planner designation, for example, is one of the industry's most stringent and respected. It requires a bachelor's degree, 15 credit hours of college-level courses in certain subjects, 10 hours of exams over two days, adherence to an ethical code and 30 hours of continuing education every two years in order to qualify for biannual renewal.
What to do
Regulators recommend that if you're an older investor and don't grasp some of these concepts as quickly as you used to, run any important financial decision past a son or daughter or any younger relative. If they're not available find someone who can at least resist the emotional pull of the situation.
In some states, such as Alabama, there are spies known as "sentinels" who are trained by securities regulators and attend any free lunch or dinner seminars hosted by financial advisers. If they see anything awry, they report it to state or federal investigators.
At the very least, seniors should never attend such events unless they are accompanied by a trusted younger friend or family member. Regulators also say younger relatives should check periodically with their older family members to see if they've been pitched any products or services by financial advisers.
As with many senior-on-senior fraud cases, a sense of loyalty keeps many victims from complaining even after losses are sustained.
Fraud on the rise
Financial abuse of older people is increasing as more seniors are lured into unsuitable investments by older financial advisers, seeing opportunities among their older clientele.
Denise Voigt Crawford, president of the Washington-based North American Securities Administrators Association, which represents state regulators says scammers are increasingly older, possibly because senior citizens put more confidence in someone their own age.
A 74-year old Mineral Wells, Texas, man, Ronald Keith was sentenced to 60 years in state prison in for persuading investors, including retirees, to put more than $2.6 million into nonexistent bank-related investments.
William Kirshner, an 84-year-old financial adviser in Corpus Christi, Texas, was sentenced to five years in state prison for stealing more than $100,000 from senior citizens and other clients who invested in promissory notes issued by his company. The prison sentence was later suspended and Kirshner was placed on probation for two years and ordered to pay restitution to eight victims.
