Retirees often fall victim to scams and high-pressure sales tactics since as a group, they’re one of the few willing to listen to the telemarketers’ pitch. If that happens, an advisor might be one of the few people to turn to for help.
Advisors need to be sensitive to the psychology and life-stage perspective of retirees. While this is not something many financial planners are trained for, Jane Brady, attorney-general and district attorney for the state of Delaware, says advisors must recognize the toll of loneliness and other emotional distresses experienced by many retirees if they are going to be effective.
Loneliness and other stresses make retirees susceptible to cheery telephone pitches, she explained, which is why telemarketers often call at dinner time. “The reality is there is nothing lonelier than sitting across the table from a chair that didn’t use to be empty,” Brady said during a press briefing at a recent retirement conference in Washington D.C. “You’re missing someone you love and a friendly voice on the end of the line perks you up.”
Brady used the example of a Delaware woman who recently contacted her for help. This woman got a telephone pitch from an individual purporting to be with "a Canadian lottery" that asked for $2,000 in order to qualify for a $160,000 prize.
National sweepstakes clearing houses are one of the top vultures preying on retirees through the mail. “There are things about getting mail, having contact and the excitement of maybe winning something that appeal to them,” Brady said. She added that during a recent investigation many customers of a well-known sweepstakes clearing house, which also operates in Canada, were retirees.
The ploy often has the desired effect, said Roy Vokes, president of Vaughan-based Agora Financial Services who became aware of the impact loneliness has on retirees while acting as a volunteer board member at a retirement home. "They keep sucking them in every time they send a bit more money they get another plastic dollar or something,” he explained, referring to worthless prizes typically given by these companies.
Being an advisor working with retirees means being available for counseling, even when there is no compensation, explained Vokes. He encourages retirees to call him whenever they receive a suspicious telephone call or mailing.
One of Vokes’s clients recently fell for another well-known sweepstakes clearing house operating across Canada that raised the stakes with each mailing. “To keep your name on the winning list you have to buy whatever they’re selling that month. They’re just clearing out junk.”
This client has been sucked into various marketing pitches for years, he said. “She’d say, ‘Yeah I could use another set of steak knives,’ even though she already had more than enough,” Vokes said. “It’s not as if she’s spending on herself. She’s really spending on the dream [of winning the sweepstakes].” It took Vokes several conversations with his client before she agreed to stop sending money.
Advisors can help identify money spent on scams or unnecessary merchandise by encouraging their clients to set up a detailed budget and then using that information to survey past expenses. “When you do that, you open up a lot of conversational doors and you may spot something,” Vokes said.