In our law firm, we frequently represent elderly clients in claims against brokerage firms and financial advisors. These claims usually include allegations that the broker took advantage of the elderly client, or recommended improper investments that benefited the broker more than the client.
Why and how do the elderly become so vulnerable to stockbroker abuse? Some of the answers may surprise you.
Isolation and Loneliness We have seen, over and over, elderly clients who are isolated and lonely. We practice in South Florida, a haven for elderly retirees. Many times, our clients’ families and loved ones live thousands of miles away. On a day-to-day basis, these clients have very few friends or social interactions.
There’s nothing wrong with having a friendly relationship with a broker. Many times, however, this relationship is abused. We have seen – especially in cases of large accounts — relationships where the broker pays weekly or bi-weekly visits to elderly clients to review accounts and investments.
For many elderly people, these weekly visits become the highlight of their social calendar. It can be easy to lose objectivity in these circumstances. To the elderly person, the broker becomes more than just a broker — he or she may become the elderly person’s best or only friend.
Unscrupulous brokers find it easy to take advantage of such situations. “Sign this.” “Don’t worry about that.” “The account will come back.” We have heard this story from our elderly clients more times than we can count.
In one of our cases, an elderly widow even gave her broker money to buy a new home!!! The broker did not report this “gift” to his firm.
Assets Old people typically have more investable assets than young people. This is no surprise. This makes old people a prime target for brokers. Why spend time courting 10 clients in their 40’s, when you can make just as much money from 1 rich old lady in her 80’s?
Mental Deterioration Getting old stinks. As people age, they begin to lose their mental faculties and abilities. This can be sad to watch. We see many wealthy, elderly people who were once strong, independent, and more than capable of handling their own affairs.
Father Time can take it all away. It doesn’t happen all at once, but gradually and slowly – so slowly that adult children of wealthy, elderly parents frequently do not see it until it is too late. They believe Mom or Dad can fend for themselves down in Florida. In reality, they cannot.
Pride For many elderly people, especially those who have been successful in life, pride does not permit them to admit that they have lost a step, that they are lonely, that they are being taken advantage of by a broker, or that they need help.
Likewise, adult children feel hesitant to question their parents because doing so would be an assault on their parents’ pride and dignity.
These problems are difficult to prevent. Many times, elderly people do not trust their own children and do not wish to share financial information with them. There is nobody to act as a “second set of eyes” over what the broker is doing.
In an ideal world, of course, investment advisors and stockbrokers would exercise fiduciary duties to these vulnerable clients and assist, rather than abuse, them. Unfortunately, this is not always the case.
If you know of an elderly person who has been abused by a financial advisor or stockbroker, feel free to contact our firm. Our lawyers have handled hundreds of cases before FINRA, and our staff includes a former FINRA administrator. Call us toll-free for a free consultation at 877-915-4040.