Becoming a victim of financial abuse can happen too easily. The effects of aging make this even more of a problem for seniors. There are a number of warning signals that help one avoid being subject to unfair, deceptive or abusive practices.
Warning Sign 1: Look beyond the letters! Be careful of designations (those letters after a name). Some are valuable. Some are not. There are over 170 designations and certifications used by financial professionals. Some are little more than marketing tool with no education or tests involved. Make sure the designation of any financial professional you use is backed up by education, experience, testing and ethical requirements. Make sure they apply a fiduciary standard to their practice — meaning it is your best interest, not theirs.
Warning Sign 2: If you don’t understand what’s being sold, don’t buy it! Some financial products are quite complicated with lots of fine print. Warren Buffett says he only buys stocks in companies that he understands. Everyone should apply that principle. Know the risks and potential downsides of any investment product. Ask questions: Can you get your money when you need it? Will there be a fee or penalty? What does the financial professional get paid if you buy the product? Questions are powerful and there are no dumb questions. If a financial professional cannot or will not explain the product clearly, find someone else.
Warning Sign 3: There is no such thing as a “free lunch!” A common approach today is a free meal at a nice restaurant. What follows is a hard-sell investment product promotion after the meal and in follow-up contacts. Don’t confuse a sales pitch for good advice or education. If you attend one of these, be skeptical. The presenter does not know you or your financial situation. NEVER provide personal information at these events. Take their information so you can get back to them later if you want. If you do follow up, go to their business location. Do not have them come to your home. And take a trusted third-party person with you to listen and provide feedback. Be cautious.
Warning Sign 4: Just because an expert recommends it does not mean it’s right for you! The best advice takes into consideration your specific situation and circumstances. More on that one next month!
Don Spencer is Kentucky Baptist Convention Church Financial Benefits Counselor.