WSJ: Significant Increase in Senior on Senior Financial Fraud says Regulators

NewImage.jpgThe Wall Street Journal is reporting that a new type of financial fraud is popping up more frequently, seniors taking advantage of other seniors.  Regulators say there has been a significant increase recently in the number of cases in which older investors have been taken advantage of by elderly scam artists.

“That’s a definite new trend,” says Denise Voigt Crawford, the Texas securities commissioner. “We’re seeing more cases of older people ripping off other older people. Someone joked that seniors ripping off their peers is becoming ‘the new retirement plan.'”

The article describes a variety of cases and types of fraud committed, but what is causing the sudden rise in occurrences? According to the article:


Many financial planners who got into the business during the bull market of the early 1980s are senior citizens themselves now. With their own wealth ravaged by the bear market of the past decade, many of these people can no longer afford to retire. That, say regulators, may be prompting some older financial advisers to engage in riskier and less ethical behavior.

The WSJ also says that many of these senior advisors stress credentials they’ve obtained.  While the article says some credentials are difficult to obtain, many can be obtained with little work and a few hundred dollars.  In fact the WSJ identified more than 200 credentials available to financial-services professionals, including at least six with the word “senior” in their name: certified senior adviser; certified senior consultant; certified senior specialist; certified senior financial planner; chartered senior financial planner; and chartered adviser for senior living.

Seniors Scam Seniors

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  • The author states: “That, say regulators, may be prompting some older financial advisers to engage in riskier and less ethical behavior.” This must be a misprint. Riskier and less ethical behavior could be very, very legal. What the article is describing is not simply riskier and less ethical behavior; it is out and out right fraud — very, very criminal behavior. In the very next sentence the author goes on to say: “Elderly investors are natural targets in part because they may be more susceptible to fraud.”

    Some of the most astute financial investors I have met are over 80. For example, an eighty plus investor I knew with a few million to burn beyond his very large portfolio patiently listened to a young advisor sing the praises of a five year muni bond which paid very high interest and down play a one year bond where the interest rate was a lot lower and the bond somewhat less risky. The senior turned to him and said: “Son, when I go to the market I have even stopped buying green bananas. Who knows how long I have to live? Let’s stick with the shorter, less risky one.”

    I laughed the other day when one of those commenting on RMD strung out four credentials, the first of which was a CPC. Now that looks an awful lot like a CPA or something related to it so off to Wikipedia I went to see if it was listed there. It listed the Conservative Party of Canada and the Communist Party of Chile. It listed a Certified Personnel Consultant and a Cost Per Click. But seeing she prided herself in pensions, I tried that out and sure enough there is a Certified Pension Consultant. There appears to require some exams and tests but nothing of the magnitude of the education required in the MSFS degree program at the American College.

    The WSJ author notes: “Some credentials are difficult to obtain, but many of the newer ones can be gotten easily—often with minimal study and just a few hundred dollars.” I wonder into what category, the WSJ would classify our own CRMP. Oh well, moving on….

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