A report published Monday by the International Organization of Securities Commissions (IOSCO) examines the growing vulnerability of ageing investors to financial fraud and other risks and identifies sound practices for enhancing their protection.
The report Senior Investor Vulnerability reveals that seniors are at a higher risk than other investors of losing money to fraud or of being misled by others.
“Ageing populations are a challenge to investor protection, as aging and associated levels of physical and cognitive decline increasingly affect the capabilities of investors in markets worldwide,” IOSCO says in a news release.
The report explores the views and experiences of IOSCO members regarding senior investor vulnerability.
“Nearly all” of them, the report says, “believe that seniors are at greater risk than other investors of losing money to fraud or of being taken advantage of by others.”
Regulators see the biggest risks to senior investors as, “unsuitable investments, financial fraud committed by a non-family member and diminished cognitive capability that affects their financial decision-making. Other notable risk factors are complex products, deficient financial literacy, and social isolation.”
Although most regulators (74%) say they have programs to protect seniors, the report says that this is based on, “the widely held belief that seniors are covered under existing investor protection programs and therefore do not require specific protection measures.”
Indeed, 39% of regulators surveyed say that they have no specific strategy for protecting seniors, apart from programs that aim to cover all investors.
The report also details a series of “sound practices” for both regulators and financial firms to follow in terms of protecting senior investors, including measures designed to enhance regulatory expertise, to provide senior-focused investor education, and additional training for industry personnel on serving and protecting senior clients.