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4 Best Resources for Preventing Financial Abuse


If older members of your family haven’t already found themselves a target of investment fraud and other financial scams, the chances are likely they soon will. The good news: A growing number of resources can help you identify and avoid possible swindles and protect older investors and their nest eggs.

About 7.3 million older Americans, or about one in every five adults age 65-plus, have been victims of a financial scam, according to a study published last year by the Investor Protection Trust, a nonprofit educational group based in Washington, D.C. Equally disturbing, more than one in three seniors (37%) said they are being pitched by “people [who] are calling me or mailing me asking for money, lotteries and other schemes.”

Last week, the Alliance for Investor Education, a nonprofit collection of trade groups and government organizations also based in Washington, published a list of 10 of the best resources focused on preventing and reducing financial abuse among older Americans. Here’s a look at the insights and help that several of these services provide:

North American Securities Administrators Association: The group’s Senior Investor Resource Center, among other features, offers a good checklist of questions to ask before investing in any product, as well as “common sense solutions” to avoid investment fraud. (Example: Look for trouble retrieving your principal or cashing out profits.)

Securities and Exchange Commission: The agency’s Office of Investor Education and Advocacy highlights red flags for elder financial abuse. Among them: a sudden reluctance to discuss financial matters, or unusual or unexplained account withdrawals, wire transfers or other financial changes.

FINRA Investor Education Foundation: Part of the Financial Industry Regulatory Authority. Its Save and Invest website features numerous articles about how to spot and avoid investment fraud. In particular, check out, “Fighting Fraud 101: Smart Tips for Older Investors.” This 14-page booklet addresses, among other topics, the tactics frequently used to scam seniors, including the “phantom riches” tactic, the “social consensus” tactic, and the “scarcity” tactic.

Certified Financial Planner Board of Standards: Publishes a “Consumer Guide to Financial Self-Defense.” This 28-page handbook gives numerous examples of possible financial abuse (an adviser, for instance, offers a client an opportunity to earn a preferred interest rate – but the “opportunity” involves lending money to the adviser himself) and offers “self-defense moves” for each of these gambits.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.