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Seniors: Helping Prevent Investment Fraud

Seniors: Helping Prevent Investment Fraud

Protecting your retirement nest egg and sustaining your retirement income are challenging enough. Taking precautions to help guard your investments from fraud is important.

People who are older can be common targets for fraud and financial crimes. Scam artists and unscrupulous sales people target seniors, who are often seen as:

  • Generally trusting
  • Home alone during the day
  • Accustomed to answering the door or the phone
  • Reluctant to report fraud
  • Confused by online ads and offers

Scam artists are well aware of these common perceptions and often use these tactics:

  • Phone calls
  • Emails
  • Personal sales pitches
  • Pop-up ads on the Internet

Here are a few guidelines to follow that may help protect you or a loved one from investment fraud.

Proceed with Caution

Don’t jump into an investment. Slick websites, smooth-talking solicitors, high pressure sales pitches, and extravagant promises can be misleading.

Before investing in any investment product or service, it’s important to consider your overall financial situation. Is the product or service right for you?

Be aware of your liquidity needs, fees, and costs associated with an investment. Consider your income needs and the overall risk you can afford to bear with any investment.

Beware of Misleading Information

There is some wisdom to the old adage, “If it seems too good to be true, it probably is.”

Offers of an investment with an above-average rate of return or income rate and little-to-no risk are almost always deceptive.

Some representatives and salespeople may use scare tactics to gain access to seniors’ savings and investments. They may threaten physical or financial harm, use intimidating statements, or call repeatedly.

Be wary if the solicitor asks you not to tell anyone else about the investment, tells you it is a one-of-a-kind deal, or that other people (maybe even dropping the names of prominent people in the area) have already bought in to the arrangement.

Services described as a “limited-time offer” or any person who pressures you to make an immediate investment decision should also raise a red flag. Don’t be afraid to ask questions or to seek a second opinion.

Beware of guarantees to make money or to achieve a guaranteed rate of return. Con artists often use promises of high returns to lure people into financial scams.

Few Things in Life Are Free

For example, seminar invitations that come with an offer of a free meal may seem appealing. However, some of these seminars turn into high-pressure events where you may be given bad advice or be pressured to open an account that is not suitable for your financial situation.

Skepticism Is Healthy

Contact your law enforcement agency immediately if you suspect an individual or organization is employing fraudulent actions.

Investment fraud can take many forms. There are Ponzi schemes, for example, where fraudsters advertise high rates of return on client investments. High payouts may continue until new investors are no longer available. Then the scheme and all the money disappear.

Other common schemes to watch out for:

  • pyramid schemes
  • scams involving coins and precious metals
  • ownership interests in oil and gas interests
  • viatical scams (known as “cashing out” of a life insurance policy, or a “living benefit”)
  • affinity fraud through community groups, clubs, and even places of worship

Healthy skepticism is a wise strategy for seniors when approached by any person with a sales pitch.

What to Do

Wells Fargo Advisors is very concerned about protecting seniors from financial fraud. We believe your financial health is an important aspect of your retirement and that it must be guarded carefully.

Even if you don’t suspect the deal or the person is fraudulent, there are a few steps to take before investing your money.

End the Conversation

Practice saying “no”, or telling the person you always speak with someone else before making decisions. Have an exit strategy.

Turn the Tables

Ask questions. A legitimate investment professional – as well as his or her firm – must be properly licensed with a regulator depending on the type of business the individual (or firm) conducts.

Talk to Someone

Stepping away from the situation and asking for another opinion can help you see the true value of an offer.

Talk with a Financial Advisor about the ways you can protect yourself or a loved one by monitoring your personal financial information and being selective in providing access to personal data.

Find out more and print out a pamphlet to read over later.

The SEC has prepared “Seniors: Protect Yourself Against Investment Fraud”.

The Better Business Bureau and the FINRA Foundation created a website and pamphlet for seniors and their families to find out more. Visit for more tips, and download “Fighting Fraud 101: Smart Tips For Investors”.

This article was written by/for Wells Fargo Advisors and provided courtesy of Carl M. Trevisan, Managing Director-Investments and Stephen M. Bearce, First Vice President- Investments in Alexandria, VA at 800-247-8602.


Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.


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