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Ageing investors at risk of fraud
A recent survey has revealed there are significant gaps in relation to planning for cognitive decline, which are potentially putting investors at risk of catastrophic financial decisions and fraud.
Ageing investors at risk of fraud
A recent survey has revealed there are significant gaps in relation to planning for cognitive decline, which are potentially putting investors at risk of catastrophic financial decisions and fraud.
The survey, compiled by State Street Global Advisors and CoreData Research in the first quarter of 2015, indicates only 32 per cent of investors discuss their plans for the event of cognitive decline with their families.
Further, investors are even less likely to discuss cognitive decline with a financial professional, at only 17 per cent.
State Street Global Advisors’ head of practice management Brie Williams said it is important that investors understand the impact of ageing on their ability to make financial decisions.
“We buy insurance for many other things in our life, and we approach investing with a risk-management philosophy, so as we age, and grow into complexity with our financial journey for ourselves and our families, you should be hedging and planning for the possibility of changes in your own cognition,” said Ms Williams.
“Not only so you as an investor can continue to maintain control, but you can protect yourself, your assets and your family.”
Ms Williams said around 5 million people are currently diagnosed with Alzheimer’s disease and that on a global basis the disease is estimated to cost $183 billion annually.
In terms of mild cognitive decline, where there are minor lapses in short-term memory, this affects around 10 to 25 per cent of people in the US who are 65 and older, she said.
Failing to prepare for this decline, Ms Williams warned, exposes older investors to the risk of making poor decisions and potentially becoming victims of fraud.
“An ASIC statistic shows that 5 per cent of Australians over the age of 65 have experienced financial abuse,” she said.
“There are a lot of fishing schemes that look very real that are taking advantage of people of any age, not just people that are in their age of wisdom. You have everything ranging from Medicare and health insurance fraud, to telemarketing, to internet fraud, to sweepstakes and lottery schemes, to grandparent schemes.”
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