Your broker or financial advisor is someone you should be able to trust, especially if you're a senior citizen. Yet it's an unfortunate reality that financial elder abuse is perpetrated by those in positions of trust, and that's why vetting financial professionals is worth every penny.
As Claudia Buck in the Sacramento Bee reports, the occasional bad-faith broker, while an exception to the rule, can easily rob a retiree blind, impoverishing them for the rest of their lives. She cites the example of Chico broker Jeffrey C. McClure, who in 2014 was barred permanently from selling securities over allegations of grave financial malfeasance.
The Financial Industry Regulatory Authority (FINRA) says that from December 2012 to August of last year, McClure used his retired client's funds to write out 36 checks for a grand total of $88,500. According to MetLife's 2011 Study on Elder Financial Abuse, these crimes add up to annual $2.9 billion in losses for our senior citizens. In response to this wrongdoing FINRA expels on average 357 bad brokers every year. Not only that, but additional data from the Wall Street Journal shows that along with Florida, California is the nation's top state for elder financial exploitation, with Sacramento holding the dubious distinction of ranking as the no. 10 city for this type of crime.
What should seniors look out for - how can they avoid bad-faith brokers? Here's some basic indicators provided by the Bee to help you and your loved ones steer clear of fraud:
- Unfamiliar signatures on checks.
- Unusual withdrawals from checking/savings accounts.
- Confused, embarrassed or withdrawn behavior by an elderly loved one.
- The appearance of a "new friend" who has access to the senior's money.
- Bills go unpaid.
- Charges for trips, gifts, and other expenditures that are unexpected.
And perhaps one of the strongest points we can emphasize is getting a second opinion on what a broker might offer. After all, no one's an expert on everything. Have a trusted, friend, family member, or another financial professional look over what kind of deal is being proposed and any potential risks involved. For a quick way to check a broker's background, use FINRA BrokerCheck.