Financial Abuse of the Elderly
PIABA 21st Annual Meeting Materials
11 Pages Posted: 14 Jul 2015 Last revised: 21 Jun 2018
Date Written: September 4, 2012
As of 2010, more than 10 percent of the population is aged 65 or older. Another 27% of the population falls into the “Baby Boomer” category, aged between 45 and 64.
The financial health of the elderly is precarious. Almost half have no housing wealth and rely almost entirely on Social Security benefits for support. In addition, this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s. It is important that the regulations and statutes protect the growing group of retirees. In a survey conducted in 2010, 20% of the respondents age 65 and over say they have been taken advantage of or were the victim of fraud. Many gave incorrect answers to basic investor literacy questions. Victims of fraud may be both men and women. A study conducted by MetLife in 2009 found: “Women who have not been in a position to make financial decisions may be more trusting in the advice of others, particularly if they are new at seeking financial advice. Women with cognitive problems may be easily influenced by others, especially if that influence increases in intensity and becomes a ‘hard sell.’” “Men may tend to be more risk-taking in making financial investments than women, so they may be prone to being vulnerable to ‘professionals’ or family members who seek to invest their money by promising unrealistically high returns.”
This paper reviews recent FINRA and SEC actions involving older customers. It then summarizes a number of criminal actions taken at the state level against investment professionals. Lastly, it reviews the state statutes that cover fraud specifically against elderly investors.
Keywords: Financial abuse, elder abuse, FINRA, brokers, SEC, investments
JEL Classification: K22
Suggested Citation: Suggested Citation