When the investment world is on a downward spiral, fear begins to take a firm grip on many investors. And when people are fearful, they’re vulnerable to investment scams. This is especially true of elderly investors.
It’s been my experience that, in the spectrum of human emotions, there
are two extremes that get people into financial difficulty. Fear and
Fear overrides the brain of people who strive to preserve what they
already have. Greed is the emotion exemplified by people who either
ignore risk or turn a blind eye to common sense in an attempt to garner
unrealistic, off-the-charts investment returns.
The victims of the Ponzi scheme that put Bernie Madoff behind bars were
good examples of greed. Some scam artists like Madoff were properly
registered, but his antics were not immediately discovered by financial
regulators. Many scam artists are nothing more than hustlers, simply out
to get their hands on other people’s money.
I firmly believe the vast majority of financial advisers go to great
lengths to educate, explain, and communicate with their clients.
Consequently, most advisers really get to know them over time.
They know which ones need their hands held during market downturns and,
conversely, those who don’t even want to be bothered when the market
stumbles. Most advisers meet with their clients year in and year out,
regardless of what’s going on in the financial world.
Their discussions aren’t just about the numbers, either. They also
include dreams, family issues, health concerns, estate planning and much
more. So financial advisers not only help clients meet their financial
goals, they also get to know them beyond the numbers.
One of the most difficult aspects of being a financial adviser is seeing
clients begin to lose some of their mental capabilities or become
seriously ill. These are times when clients are most vulnerable to quick
talking scam artists. And when responsible financial advisers intervene
to protect their clients from those fast-talkers trying to get into
Several years ago I was meeting with a widower client. I sensed his
mental sharpness had diminished so I tracked down one of his adult
children. She thanked me and said that she had also noticed a change. By
getting involved, a problem was averted with minimal financial damage.
In another instance, a client’s spending suddenly increased and a
“friend” took inquiring telephone calls instead of the client.
Protective Services for the Elderly was contacted and, once again,
intervention prevented someone from taking financial advantage of a
Of course, not all investors work with a financial adviser. So they lack
an extra set of eyes watching out for them; something especially
important as they enter the point in life where they have two things
that scam artists find most desirable: Money and old age.
That’s why I recommend that people establish a life-long relationship
with an adviser during their working years. Advisors can not only help
protect you from people trying to pry your money away, they can also
help when your health begins to fade or you otherwise struggle with the
In other words, financial advisers who know their clients are the first
line of defense to help protect you and your nest egg from anyone trying
to steal your assets.