Ignoring the Pitches: No Cost, No Obligation

By Martha M. Hamilton
Sunday, September 9, 2007

Got some money? Have I got a deal for you!

And I'm not the only one. Hundreds of thousands of offers -- many way too good to be true -- are crawling through our mail slots and into our e-mail, cellphones and BlackBerrys.

Last week's hearings by the Senate Special Committee on Aging and tomorrow's Seniors Summit hosted by the Securities and Exchange Commission are focusing the spotlight on scams that take advantage of older investors.

Scammers don't discriminate by age. They target anyone with money, from the young and vulnerable to the retired and anxious. According to a new national survey by the Financial Industry Regulatory Authority (FINRA), 67 percent of investors are worried about being defrauded. And everyone should be.

But a wave of baby boomers are headed into retirement now and in the years ahead with an estimated $16 trillion in savings. So, operating on the Willie Sutton principle, con artists and unethical financial professionals are focusing on older investors "because that's where the money is."

"Obviously, if you're looking for a plum target, you want to look at somebody at the state of life where their asset level is the highest, and usually that's right when you retire or right before," said Elisse B. Walter, senior executive vice president of FINRA (a combination of NASD and the enforcement branch of the New York Stock Exchange).

If you have any doubt that the unscrupulous have picked up on this fact, consider these figures from the North American Securities Administrators Association. According to Joe Borg, NASAA president and Alabama security administrator, a 2005 survey found that 28 percent of complaints of fraud came from investors 50 and older. But in a survey to be released this week, that percentage is 44 percent.

A substantial number of the complaints involved equity-indexed annuities, which Borg says are a lousy investment for many people. (I'll write about them and how they are different from other types of annuities in a future column.) State and federal regulators hope to educate investors not just about con artists' tactics but also about ways to cut them off before they make their pitches.

Younger investors tend to throw away mail and hang up on unsolicited calls, so fraud artists reach out to them through voice mail, text messages and the Internet. But retirement-age investors, especially those who live in affluent Zip codes, find themselves courted with invitation after invitation both by mail and phone. Free lunches. Free dinners. Free investment seminars with famous people. And "no pressure, no cost, no obligation." All these generous souls want to do is give you a little investor education.

The North American Securities Administrators Association says scammers will try to impress you by attaching the word "senior" to their title; after all, that would suggest that they are highly trained to deal with financial issues facing retirees.

For instance, a "certified senior adviser" representing Investors Capital told a Massachusetts seminar that his title meant he was specifically trained to manage and solve financial problems facing seniors. What he didn't tell them was that the training for certified senior advisers was a three-day course or a home course, followed by a multiple-choice exam, according to a complaint filed by Massachusetts. The state later charged the firm with misleading investors, especially seniors, into buying equity-indexed annuities.

The best way to protect yourself from a con artist is to hang up the phone or not respond to a mailed or e-mailed pitch from someone you don't know. But just giving that advice isn't enough, said FINRA's Walter. Sometimes investors, especially older investors who feel compelled to be more polite, may need help developing techniques. If you're not naturally surly, sullen and cranky, practice saying, "I'm not interested," she recommended. Or say: "I never make a financial decision without first speaking to . . ." and fill in the blank. Or tell them you'll call them back.

Even better, if you're not already on it, get on the national "do not call" list ( http://www.donotcall.gov) and save yourself the phone-call angst.

As for the mail and the e-mail, throw it away or delete it, or to reduce the number of unsolicited offers in your actual mailbox, go to http://www.dmaconsumers.org/cgi/offmailing.


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