Wednesday, June 24, 2009


Beware of Elderly Financial Abuse
June 1st, 2009

According to, “elder financial abuse costs older Americans more than $2.6 billion per year and is most often perpetrated by family members and caregivers, according to a new report released by the MetLife Mature Market Institute. The study indicates that for each case of abuse reported, there are an estimated four or more that go unreported. Family members and caregivers are the culprits in 55 percent of cases; financial losses are higher with investment fraud scams”.

Why are the elderly such high profile targets? One word: money. It should be no surprise that the 65 years and older households have a significantly higher proportion of households at the upper net worth level (43 percent have a household net worth of $100,000 or higher), according to various demographic studies, more than all other age-based household categories combined.

So, given what we know, what might be the next (financial abuse) shoe to drop? I believe it could be variable annuity sales abuses that pay ultra-high commissions to would-be predatory financial carnivores and in many cases unnecessarily tie up an older investor’s funds in an underperforming, high-fee insurance product masquerading as a prudent investment opportunity.

Do not get me wrong, insurance within itself is a necessity for practically everyone and an annuitized income stream could be just what the doctor ordered for a retired individual; however, insurance intended to replace tried and true investment securites (certificates of deposit, money market funds, bonds, stocks and mutual funds held outside an annuity), too much insurance without any consideration of an individual’s unique situation, and/or insurance sold to a retiree (whether an annuity or not) for the sake of achieving large sums of commissions for a financial professional when there are other lower fee and higher performance investment alternatives readibly available are a real concern.

In fact, I had an extensive conversation a few years back at the Tulsa Press Club following a Page One luncheon with Oklahoma Insurance Commissioner, Kim Holland, which suggested that the next big focus (in Oklahoma and nationally) might indeed be on unscrupulous variable annuity sales practices against the elderly.

Incidentally, in February 2009, Ms. Holland and the Oklahoma Insurance Commission issued an emergency cease and desist order against American Senior Estate Services and two of its representatives for attempting to sell insurance products in Oklahoma without an insurance license and for using “fraudulent” and “dishonest” business practices. The Plano, Texas-based organization had recently attempted to solicit insurance products in Ardmore by telephoning local senior citizens and falsely implying the seniors’ attorneys had hired the company to review their trusts. The company would then attempt to set up appointments with the seniors and pitch insurance annuity products.

Some say that getting older is hard, so why does the insurance and investment arena need to make it more so? It does not have to be like that!

Tags: National Events · Oklahoma City · Personal Finance · Tulsa · Wall Street

No comments:

Post a Comment