Seniors lose at least $2.9 billion annually to financial exploitation, and roughly 1 in 5 Americans aged 65 or older have been victimized by financial fraud, according to the Securities Industry and Financial Markets Association (SIFMA), which is the voice of the nation’s securities industries.
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In part two of FOXBusiness.com’s interview with SIFMA’s Lisa Bleier, Managing Director & Associate General Counsel, we discussed the growing epidemic of financial fraud and how to make sure you don’t become a victim.
Boomer: What are the biggest risks to senior investors?
Bleier: Seniors are often at greater risk of becoming victims of financial exploitation – both because they often have the most amount of funds saved and also due to vulnerabilities that arise from changes to our brain as we age. While we all have heard of the scams about the Nigerian prince email offering to wire funds in exchange for account information, most financial fraud occurs closer to home.
An estimated 55 percent of financial abuse in the United States is committed by family members, caregivers, and friends. This number is based on “reported” accounts, which means that actual cases of financial abuse could be far higher.
Every day for the next 16 years, 10,000 Americans will turn 65. This means that of those 10,000, an estimated 2,000 of them will be a victim of financial fraud.
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Boomer: What are firms doing to protect seniors from these risks?
Bleier: SIFMA is currently working with State and Federal lawmakers to develop a reporting pathway for firms, which would allow firms to temporarily hold a suspect transaction and report it to appropriate state agencies. Those agencies would then be able to investigate the matter and provide guidance to the firms, with the ultimate goal of being able to stop exploitative transactions before they occur.
We are also working to ensure that firms are allowed to provide the agencies with the records and information necessary to investigate the suspect transaction, as well as provide advisors with the ability to reach out to trusted third parties if there is cause for concern.
Firms are also working to strengthen their internal structures and policies in order to better serve and protect their senior clients. For instance, a growing number of firms are asking clients to provide contact information for a trusted third-party with no signatory authority over the account, so that if a situation does arise in the future, the firm has a trusted contact on record. Furthermore, SIFMA and its member firms have been working with researchers to develop a better understanding of how aging affects our financial decision-making and further strengthen our understanding of these issues.
For more tips on how to protect yourself, review this handy checklist from SIFMA.
*Part I of our interview with SIFMA on the Department of Labor’s proposed retirement regulation was published on 10/15/15.
*This conversation was edited for length and clarity.