Common Senior Investment Scams: How to Help Mom & Dad

It's a sad truth, but older investors are increasingly at risk for investment fraud and stockbroker misconduct. Financially exploiting the elderly has become so common, in fact, that it is estimated that at least one in five elderly investors have been taken advantage of through inappropriate or unsuitable investments, hidden or excessive fees, or outright fraud. Looking at your own parents, it's hard to think of them as vulnerable. Unfortunately, the fraudsters are out there all the time, and it falls to you to help protect Mom and Dad.

Promises of High Returns
Fraudsters know seniors are planning for the immediate future and often don't have ten or more years to let an investment grow. Especially considering Medicare cuts and the tanking economy, many retirees are looking for better ways to pay for long-term care and daily expenses. The idea of a return that is even 1% better than what they have becomes very enticing.

Sense of Urgency
It seems like everyone is vulnerable to this tactic, especially seniors with cognitive difficulties. The fraudster pitches a great investment opportunity, but claims it's a "limited-time offer" or won't be available tomorrow. No one wants to let a great deal get away, so many seniors will jump on these investments without seeing any documentation or even meeting in person!

Why Do These Scams Work?
These scams work because they seem to specifically take advantage of those who have free time and are eager to socialize -- such as retired seniors. Fraudsters try to gain your parents' trust by being a "best friend" and calling often or offering to buy lunch.

Once the fraudster has managed to get an "in" with your Mom and Dad, they will then tailor their tactics and lies to your parents' needs -- promises of high returns for rolling funds into an unsuitable annuity, using guilt regarding a spouse's health, or otherwise creating pressure or urgency to invest right away. Because your parents trust this person, they may not look as closely at the prospectus or do any background work.

What Can I Do?
The most important step is to open the lines of communication about your parents' finances. Look at common scams together, talk about ways to research an investment, and pay attention to who your parents are spending time with.

If you can't dissuade your parent from an investment that sounds "fishy," then attend the seminar or meeting along with them. Talk about it afterward as you go over documents. Consider submitting their telephone number to the "Do Not Call" registry and stop junk mail delivery when possible.

We serve victims of senior investment fraud in stockbroker mediation, arbitration, and litigation. If you believe your parent has been taken in by investment fraud or broker misconduct, contact a respected investment fraud lawyer today at 1-866-8-BROKER (827-6537). Also, to help open a discussion with your parents about investment fraud, request a copy of our FREE book Five Signs of Investment Fraud ...And What to Do if it's Happened to You.