Counties that have a large population of wealthy elderly people also have problems with brokers.
Broker misconduct is costing elder Americans $17 billion annually, according to estimates from the White House.
An article in Forbes entitled "What Your Aging Parent's Broker Isn't Telling You" details a recently released study conducted over a 10-year period by researchers at the University of Chicago and the University of Minnesota that reveals broker misconduct is very common in counties that have a large population of elderly people who are wealthy.
Palm Beach, Fl., for example, has a broker misconduct rate of 18.1%. In other words, 18.1% of brokers in that county had in some way violated the trust of their clients and caused financial losses for those clients.
This is a form of elder abuse if brokers are intentionally taking advantage of elderly clients who might be suffering from memory loss or a lack of attention.
Forbes has a couple of suggestions to help protect against the problem:
- The website BrokerCheck lists most violations and disciplinary actions that have been taken against brokers. Information can be searched by a broker's name and firm. Not all violations and reports are listed on the site, but it is a good starting point as one-third of violators are repeat offenders.
- If you are not certain about the investment advice being given by a broker, it is a good idea to get a second opinion from someone with whom you have a fiduciary relationship. For example, an elder law attorney or accountant might be able to give you a general idea about the broker's reputation and the soundness of investment strategies.
Reference: Forbes (March 15, 2016) "What Your Aging Parent's Broker Isn't Telling You"