Over 80% of the private wealth in the United States is held by those that are 55 and older.

Senior citizens maintain the most wealth and are the most likely to be targeted for an investment scam.  Many seniors are taken advantage of by people they know, friends, family, and outsiders looking to raise a buck. Seniors need to be cautious to ensure that they do not fall victim to some of the recent investment scams sweeping the nation.

Missouri Secretary of State, Jason Kander, has been working to educate seniors.  In a recent educational tour Kander discussed what he feels are the greatest risks to seniors.

  1. Unlicensed sales people.  When seniors, or any investor, is contacted by someone claiming to be a certified investment advisor, they should contact the state to make sure they are actually licensed.  Those that claim to be, but aren’t, should be avoided and reported.
  2. Online brokerage accounts managed by a third party.  When a third party is involved there can be sharing of information and the likelihood of inappropriate transactions between the parties increases. We recently published a story about a company that was making trades with its affiliate at the expense of investors.
  3. Ponzi schemes.  It is important to research the investment to make sure it is not a ponzi scheme.  Ask to see information on their dealings to see how revenue is generated.  The company needs to make money in order to pay investors dividends.  If they don’t sell anything, they shouldn’t have money to pay out.  If they do have money to pay out, it is probably coming from new investors.
  4. Out of the area real estate investments.  Kander warns of real estate investments that you cannot physically visit.  If it is in an obscure location exercise extreme caution.
  5.  Investment Funds.  When you invest in a fund, that is supposed to invest in companies, you have less ability to conduct due diligence than if you invest in a company directly.

Kander isn’t the only one warning seniors.  CNBC published an article this week warning of common investment scams that target seniors.  These include:

  • Scammers pretending to be legitimate charities. Scam artists have been posing as charities, calling seniors on the phone, and getting their credit card information for identity theft.  You can protect yourself by taking down the name of the charity and calling their office during business hours.  Use a phone number you find from an independent source and make a donation when you initiate the call, not the other way around.
  • Grandma scams.  In this case the scammer calls up an elderly person late at night, while they were probably in bed, and poses as a grandchild in trouble.  The scammer asks for them to wire money without telling anyone due to embarrassment.  Low and behold the person calling is actually not a relative.
  • Stimulus check.  This scam surfaced last year where people would call seniors and say they qualified for a one time only stimulus check.  They would proceed to ask them personal questions that would enable them to steal the persons identity.

As a senior, or any investor, it is important to protect yourself from investment scams.  Ask questions, discuss the opportunity with friends, and do your research.  There are plenty of solid investment opportunities to chose from.  Those that are legitimate will welcome your questions and provide information freely and easily.