A recent consumer alert issued by the state of Colorado reminded me of a study conducted by the Investor Protection Trust. It found that a staggering 20% of Americans over the age of 65 have been taken advantage of financially. This includes being convinced to make an inappropriate investment, being charged unreasonably high fees for financial services, and being sold fraudulent investments.
Why are elderly Americans particularly prone to financial scams? It turns out that the culprit is mild cognitive impairment. Mild cognitive impairment is caused by changes in the brain and is the transition stage between the cognitive decline of normal aging and the more serious problems caused by Alzheimer’s disease. It negatively affects its victims’ reasoning and judgment skills, making them more likely to engage in risky behavior. Nearly 35% of Americans over the age of 71 have either mild cognitive impairment or Alzheimer’s disease.
The good news is that people are becoming increasingly aware of these potential vulnerabilities in older Americans. In fact, several large financial and medical organizations have joined forces to combat the problem by enlisting the help of medical providers who treat elderly patients on a regular basis. The providers ask high-risk individuals a battery of questions about their financial affairs in order to determine if they are being victimized or not.
A good lesson to be learned at any age is to do your due diligence and ask questions before you turn loose of any money (or any personal information). At Sherwood Investment Management, we welcome questions from our clients and potential clients and we do offer references. Any reputable financial representative should be willing to offer substantiation of any service/product offered and be forthcoming with references. And of course, be sure to repeat the age-old truth: If it sounds too good to be true, it probably is.
Photo by Victor D. Giraldo