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Market Volatility is a Reminder that Elderly Investors are Vulnerable to Financial Abuse

In January, Patrick T. Harker, the President of the Federal Reserve Bank of Philadelphia, authored an important op-ed that appeared in Bloomberg View. Mr. Harker noted that elderly investors are at heightened risk of financial abuse, and that bankers and financial institutions need to do more to protect these vulnerable inventors.

Soon after this piece was published, global equities sustained major losses. On a single day, the Dow Jones Industrial Average (DJIA) fell more than 1,170 points. Other U.S. markets suffered similar drops. The VIX, a key measure of market volatility, spiked more than 50 percent. This most recent market meltdown should serve as a stark reminder to all investors that they need to consistently reassess their portfolio and risk tolerance.

This is especially important for elderly investors. Sadly, too many unscrupulous financial advisors recommend risky financial products and trading strategies to elderly investors in order to chase larger fees and commission payments. This should never occur. It is imperative that elderly investors always have a portfolio that conforms to their individual investment objectives and time horizons.

Reassess Your Portfolio: Market Volatility Increases the Risk of Large Short-Term Losses 

Your broker or brokerage firm should only recommend investments that are truly suitable for your individual objectives and financial situation. Unfortunately, far too many innocent investors end up getting pushed into wholly unsuitable investments. While short-term market volatility may not matter much to an investor who has a 40 or 50-year holding period and the temperament to tolerate short-term losses, most people do not fit into this category. Most older investors have much shorter holding periods. Being heavily invested in stocks and other volatile financial assets is not an appropriate strategy for an investor who:

  • Plans to live off of investment income;
  • Has relatively limited financial resources;
  • Does not want to hold risky investments; or
  • Has cognitive trouble understanding the risks.

The bottom line: volatile investment strategies are not suitable for many of Florida’s elderly investors. As Mr. Harker referenced in his article, investors with mild cognitive impairments (MCI) are at an especially high risk of being exploited. This exploitation occurs in many different ways, from brokers recommending unsuitable trading strategies to generate higher fees to outright fraud, which may include the forging of signatures and the cashing of bad checks. All families in Florida should let this market downturn serve as a reminder to watch out for the best interests of their most vulnerable loved ones.

Contact Our Florida Investment Fraud Attorney Today

If you or a family member is an elderly investor who has lost money to do the negligence or misconduct of your financial advisor, we can help. Our dedicated securities fraud attorney Gregory Tendrich has helped many Florida investors recover full and fair financial compensation for their losses.

To arrange a free, fully confidential case evaluation, please contact the office of Gregory Tendrich, P.A. today. With an office in Boca Raton, we represent elderly investors throughout South Florida, including in West Palm Beach, Port St. Lucie, Wellington, Riviera Beach, and Boynton Beach.

Resources:

cnbc.com/2018/02/06/key-measure-of-market-volatility–the-vix–jumps-above-50-highest-level-since-aug-2015.html

bloomberg.com/view/articles/2018-01-09/stop-financial-crimes-against-older-americans

npr.org/sections/thetwo-way/2018/02/05/583325123/stocks-extend-losses-with-dow-dropping-more-than-300-points-at-the-open

Gregory Tendrich, PA
Gregory Tendrich, P.A. serves clients throughout Florida, including the cities of West Palm Beach, Palm Beach, Delray Beach, Boynton Beach, Boca Raton, Port St. Lucie, Lake Worth, Wellington, Riviera Beach, Palm Beach Gardens, Fort Pierce, Vero Beach, Hobe Sound, Jupiter Island, North Palm Beach, Lake Park, Lantana, Stuart, Palm City, Jensen Beach, Tequesta and Juno Beach and represents clients in Palm Beach County, Martin County, St. Lucie County, Indian River County and throughout Florida.

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