Financial exploitation of the elderly by a financial advisor can take many shapes and forms, and it is indeed possible to recover one’s financial losses from the broker or financial institution who carried out and supervised the misconduct. Wrongdoing by a financial professional can be difficult to expose because it often arises out of relationships built on trust, and can go undetected for many years by the affected senior and family members.
Some types of broker misconduct are easier to identify than others. Cases of outright fraud, for instance, could include the broker forging an elderly customer’s signature, falsely representing the worth or activity in an account, omitting the risks of a particular investment, recommending and selling unnecessary investment products (e.g., certain annuities), or trading excessively in a customer account solely to generate commissions (otherwise known as “churning”). Regardless of motive or intent, an investor’s financial losses from the misconduct can be no less catastrophic. If anything, this should point to the incidence rate of financial abuse amongst the elderly to be more prevalent than many people realize. Indeed, research has shown that American senior citizens lose over $36 billion per year from financial exploitation. That number is only expected to rise with increasing life expectancy and the expanding demographic of senior citizens within the United States.
Financial elder abuse is also greatly underreported. According to the National Adult Protective Services Association, only 1 in 44 cases of financial abuse is reported. The National Center for Elder Abuse points to studies that have identified feelings of shame as being one reason for the underreporting, in part related to the embarrassment of having fallen victim to financial fraud, but also to the embarrassment of having to disclose that one is suffering from age-related memory loss or cognitive decline. On this latter point, memory impairment of an elderly investor only adds to the underreporting of broker misconduct.