Q: I’m a recently retired gay man. With everything I’m reading lately about fraud and other retired seniors losing their life savings to these crooks, I’m worried something like that could happen to me. Any advice on how to protect myself?
A: Considering what’s been going on lately, you’re absolutely right to be concerned. Even successful retirees can be fooled by today’s crafty investment con artists. Here are some things you need to know to help keep the gold in your golden years.
With trillions in assets and plenty of time to listen to sales pitches, seniors have become popular targets for fraud. Promises of windfalls from persistent telemarketers and self-proclaimed financial specialists with shaky credentials have made fraud against those 65 and older a profitable business.
The upcoming retirement of the boomer generation means the vast majority of Americans’ net worth will soon be in the hands of the newly retired. “Scam artists will swarm like locusts over this increasingly vulnerable group — because that’s where the money is,” warned Securities and Exchange Commission Chairman Christopher Cox in a 2006 speech.
To protect yourself, “find out all you can about the individual and the company,” said Joseph Borg, president of the North American Securities Administrators Association, the U.S.’ oldest international investor-protection organization. Do business only with financial advisors and financial institutions with proven track records — and keep these five tips in mind:
1. Beware of impressive-sounding titles that suggest expertise in advising seniors.
Some examples are “senior specialist,” “retirement specialist” and “certified financial gerontologist.” Many titles mean nothing or can be secured with little more than a membership fee. Most legitimate investment salespeople have to be licensed and registered with the SEC, a state securities regulator or the Financial Industry Regulatory Authority.
2. Avoid investments that aren’t suited to your situation or stage of life.
Certain investments that have withdrawal penalties or otherwise lack liquidity may not be a good option for retirees. These include certain annuities and real-estate investments. FINRA recommends watching out for products that involve using your home equity or retirement savings to fund high-risk investments.
3. Be cautious when told that investment decisions have to be made immediately or in secret.
If a salesperson uses the high-pressure tactic of saying your investment decisions have to be made on the spot, don’t comply. Such decisions should be made only after you have had time to think and make sure that you know all the facts. Also, avoid anyone who insists that you make your decision without discussing it with family members and other advisors. A legitimate seller has no need for secrecy.
4. Be suspicious of one-size-fits-all sales pitches.
A responsible financial advisor will want to learn about your individual circumstances before recommending any investment or strategy. They should ask about your financial goals, investment time horizon and risk tolerance. If they don’t, how can they suggest ideas that are right for you?
5. Avoid e-mail and Internet scams aimed at seniors.
Ignore unsolicited e-email. E-mail scams may claim to be searching for business partners and promise high returns on the next big investment opportunity. The Internet is one of the cheapest avenues for con artists, who buy millions of e-mail addresses for a few hundred dollars. If you don’t know the e-mail’s sender, don’t even open it.
If you can follow these guidelines, you’ll be one step ahead of those who would try to take advantage. Protect yourself ... and enjoy your retirement!
Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by the law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
Smith Barney is a division of Citigroup Global Markets Inc. Member SIPC.