Protecting Older Investors and Elevating Their Voices

As part of our ongoing fraud prevention work, AARP has collaborated with the U.S. Securities and Exchange Commission (SEC) on a series of events designed to spotlight the growing problem of investor fraud and help older investors and family caregivers spot and avoid financial scams. 

For the second event in the series, I moderated a panel for the SEC’s “Older Investor Roundtable,” which featured a discussion on fraud, financial planning, and the challenges faced by older investors and their caregivers.  

Before sharing highlights from the session, I want to thank the SEC, Chair Gensler, Commissioner Peirce, Commissioner Crenshaw, and the North American Securities Administrators Association (NASAA) for putting on this tremendous event and continuing to serve as critical partners to AARP in our effort to educate, support, and advocate on behalf of our members and consumers. This event highlighted the lived experiences of older investors, and I am thankful to the SEC for recognizing the importance of elevating their voices.  
 
As I said during the session, every year millions of Americans lose BILLIONS of dollars to fraud. Scammers target the young and old alike, but when older adults fall victim to financial crimes, they often have more to lose given their decades of hard work and savings. And while the financial toll is immense, the emotional aspect is equally as profound, for the individual the crime was perpetrated against, as well as their caregivers and loved ones. That’s why it’s so important that we work to arm our constituency with the knowledge to spot and avoid scams, and to help raise awareness on the growing issue of investor fraud. 

Panel 1: Impact of Fraud and Fraud Prevention  

Let me share some key themes and helpful tips from panelists Amy Nofziger, Mary Bach, and Byron Peterson. 

1. Create Barriers of Entry 

As Amy Nofziger, AARP’s director of fraud victim support, said, “none of us ever thinks this will happen to us,” and so “people don’t pay attention to education on a topic that they don’t think will happen to them.” As a result, we need more proactive measures to stop the crimes before they happen. Amy noted that restrictions are more likely to exist for other types of products, but less so in the financial and technological arenas. For example, when you go into a hardware store, you have to ask a clerk to unlock the spray paint from the cabinet, but you could walk up to a cryptocurrency machine at your local gas station or purchase thousands of dollars worth of gift cards without any barrier. More restrictive rules around point of entry, especially associated with gift cards and cryptocurrency, would go a long way towards stopping the crimes and criminals before it’s too late and the money is gone. 

2. Never feel pressured to rush into an “opportunity” 

Mary Bach is an AARP fraud fighter volunteer and the chair of AARP Pennsylvania’s Consumer Issues Task Force. She also moonlights as an undercover “senior sleuth” at investment planning seminars to get the inside scoop on ‘opportunities’ that are too good to be true. Attending more than 35 events, Mary and her husband have had several eye-opening red flag experiences, including generalized pitches with vague charts and percentages, exaggerated claims of no risk and guaranteed returns, and representatives with fake credentials, including “CSS- Certified Senior Specialist" and “CHSG-Certified High School Graduate.” She was even once told: “you write me a check for $100,000, and we’ll work out the details later.” As Mary said, “it may take only one bad investment and uninformed decision to wipe out your life savings.” That’s why it’s critical to do your homework on the investment opportunity and never feel pressured to rush into a deal.  

3. Change the narrative: The victim isn’t the one to blame, the criminal is.  

Byron Peterson, a member of AARP’s Connecticut Executive Council and lead Fraud Watch Network volunteer, is helping spearhead AARP’s initiative to change how we talk about fraud. Too often, we blame the victim and fail to recognize the role of the criminal who perpetrated the crime. This frequently results in fraud going underreported, leaving victims too ashamed to speak up against the criminal for fear that they will be seen as ”incompetent” or “foolish.” As Byron referenced, one of the many ways AARP is shifting the narrative around fraud is by working with universities that offer classes in criminal justice, gerontology, law, nursing, and social work to adapt coursework in a way that helps build interest and understanding about older adults’ experiences. Through education and advocacy, we aim to change how people view the issue of fraud, which, in turn, will help change the way institutions respond to these crimes and allow victims to report them more openly and seek help. 


Panel 2: Financial Disclosures and Advisors 

Our discussion about fraud was followed by a conversation on retirement planning and financial advisor transparency and standards.  

1. Advisers should be held to a fiduciary standard.  

Stephen Brundage, an AARP Tax-Aide volunteer, stressed the importance of Americans’ access to honest and sound financial advice and disclosure. According to Steve, “too many Americans, especially among the elderly, receive inadequate and often flawed advice. Workers and their families must be able to timely monitor, understand and manage their lifetime savings, and full and meaningful disclosure is critical.” Steve later mentioned that advisors should be held to a fiduciary standard, putting client’s interests first.  

2. Accessible and understandable disclosures are vital.  

The conversation also featured Certified Financial Planner Lee Baker, an AARP regional volunteer director, who highlighted the importance of reviewing financial documents, asking listeners, “how many here today have almost blindly agreed to whatever disclosure it is that pops up when we buy a new electronic device? Did you actually read all the documents in the closing packet when you refinanced or purchased your home? I believe we all know that the percentage of us that actually read everything is low, and the percentage that fully understand what it is we read is lower even still. We have got to continue to work towards a method that mitigates the risk to our consumers.”  

Action Steps 

I concluded the session by offering recommendations for addressing fraud, including an interagency workgroup prioritizing older adults and legislation to strengthen enforcement and prosecution of criminals, and ways to address disclosures for older investors. What follows are AARP’s proposed action items coming out of the roundtable:  

Regarding fraud:  

• AARP encourages the establishment of an interagency working group on older adults. We also encourage the SEC to set up a working group across its various divisions to promote issues and policies on older adults, with a focus on affinity fraud and social media fraud.  
  
  
• AARP also supports H.R. 5914, which would move the administration of the Senior Investor Protection Grant Program to the SEC. Among other things, the bill would help strengthen state-level enforcement and prosecution of those who target older adults for fraud. 
  
  
• Finally, we believe the SEC could send a strong message with a planned enforcement action aimed at multiple investment scammers in a way that highlights the culpability of criminals, not the actions of victims. 

 
Regarding disclosure:  

• It is vital that advisers be held to a fiduciary standard. A client's interest must be held above the adviser's own personal interest when giving advice about saving and investing for retirement.  
  
  
• Americans have a right to know if retirement plan fees are fair and reasonable. Clear and accurate information on the amount and make-up of fees is paramount.  
  
  
• We also know that things can and will go wrong. Avenues for recourse should be included in disclosures made by the SEC. Consumers should be informed of how they can fix problems in a clear and actionable way, especially regarding fees and fiduciary duties of advisers.  
  
  
• We call on the Commission to ensure that disclosures meet consumer needs, particularly regarding understanding of fees, conflicts, and avenues for further support.  

I am thankful for the opportunity to work with the SEC to plant our flag in the ground against the scourge that is fraud. I believe these important events go a long way towards helping to educate, support, and advocate on behalf of consumers and their retirement security. I look forward to continuing this work.  

AARP’s Fraud Watch Network is a free resource for all that works to help consumers proactively spot and avoid scams, offers guidance from fraud specialists if you’ve been targeted, and advocates at the federal, state, and local levels to protect consumers. Sign up for free Watchdog Alerts, review our scam-tracking map, or call our toll-free fraud helpline at 877-908-3360 if you or a loved one suspect you’ve been a victim.