8 Key Risks Facing Older Investors

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As Americans are retiring in unprecedented numbers, awareness is growing about the aging process and the associated risks that can lead to financial hardship for clients — especially those presented by diminished mental capacity and a higher likelihood of financial exploitation.

To help protect aging clients and firms alike, Fidelity Investments published an in-depth report about the risks associated with working with senior investors. According to Fidelity’s analysis, all advisors and client-facing associates should be aware of specific signs that a client may be at risk of financial abuse.

Likewise, Fidelity says, firms should consider establishing risk management policies and procedures for dealing with these sensitive situations.

“From enhancing client communications to establishing stronger relationships with family members, thoughtful best practices can benefit aging clients with growing risks — as well as the advisors who serve them,” the report argues.

As the report explains, for years, when the advisor community focused its eyes on the baby boomer generation, the main thought that sprang to mind was about the opportunity presented by serving this sizable and wealthy segment of the U.S. population. That’s for good reason, Fidelity’s report notes, as baby boomers are projected to control up to 70% of all U.S. disposable income over the next five years, and they also stand to inherit another $15 trillion.

Unfortunately, alongside this tremendous opportunity, there is also a significant degree of risk.

On the one hand, in recent years, there has been a significant rise in cases of dementia, or diminished cognitive capacity, which most commonly manifests as Alzheimer’s disease. According to the Alzheimer’s Association, the number of Americans with Alzheimer’s disease and other dementias could triple by 2050, unless medical breakthroughs are developed to prevent, slow or stop the disease.

Because of this and other factors, Fidelity warns, older adults are a prime target for financial scams and other unscrupulous acts, regardless of their physical and mental condition.

See the slideshow for a rundown of eight key facts about the risks (and rewards) of working with senior investors. As Fidelity’s report emphasizes, advisors have a tremendous amount of value to deliver to this client segment, and with the right practices and procedures in place, they can be sure to do so effectively.

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