Making Cents: What is a Senior Investor Anyway?
By: John P. Napolitano, CFP®, CPA, PFS, MST
There is a lot of news regarding elder abuse and the tactics used to confuse older, senior investors. According to regulators, anyone over age 60 is considered a senior investor. And as always, your government (for your protection of course) will come up with some set of complicated rules for all investment businesses working with clients over age 60. But rules don’t stop bad people. Common sense and education is the best way to prevent abuse and insulate yourself from the charlatans and crooks that may try to sell you something.
One part of the potential protections being contemplated by many firms is having a ‘known person’ under the age of 60 be listed on the senior’s accounts in case the investment company thinks that something isn’t quite right in the accounts or in the financial house in general. The known person must know the investor, and the advisor of the client must also know, or at least meet the known person. I feel that this is wise for many reasons. One being that most unsophisticated investors may benefit from a second set of eyes in general. If you like this idea, consider having your known person receive copies of your statements and ask them to review them regularly to see if they notice anything.
Have you ever heard the ads on radio and TV trying to attract nervous investors who may be afraid of losing money? You probably have. These advertisers are frequently selling guaranteed insurance products, which in general may not be likely to lose you money, but they may not be the best choice to get you to point B either. These products can be extremely expensive and lock you up for a long time to forever, usually with a limited or capped upside.
Avoid making investment decisions based on emotions. Don’t fall for pitches that try to scare you about ‘running out of money’ or the fact that the ad was run on a reputable station, therefore inferring that the advertiser must also be trustworthy. Obtain documentation about expenses, the lock up period, how to get your money out and the other downside consequences if you change your mind and want to unwind the investment later. Ask a knowledgeable persons second opinion about the specific proposal.
Lastly check with the regulators to see if your salesperson has a clean record or one spotted with complaints. Brokercheck.com, sponsored by FINRA is one such place to check. But solely rely on that as it only serves investment brokers and financial planners. Insurance agents, for example, are not on this site and won’t be found here. For that, you must check the National Association of Insurance Agents Consumer Information Source. Remember, not everything will be found, so as a last measure ask, in writing if the person trying to sell you some investment product has ever been the subject of a complaint, investigation or lawsuit.
John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.