Today, the Consumer Financial Protection Bureau named Hubert H. Humphrey III to direct the newly created Office of Older Americans, which was established to focus on elder financial abuse – especially in connection with reverse mortgages and retiree bankruptcies. Based on the cases that have come through our securities law firm, other areas that need immediate attention include: high yield investments and variable annuities.
In a statement by Raj Date, a senior Treasury advisor, he stated that seniors are targeted by fraudulent practices and, according to the CFPB, are losing almost $3 billion a year from such abuses. Such poor investment advice is an important issue for seniors who often have more assets than younger investors and are in a position where they have to make complex financial decisions. A representative of the AARP explained that older Americans are being talked into investing in annuities using money from a reverse mortgage – a practice that she says is a very bad investment decision.
One concerning practice is the growing prevalence of financial advisers with a so-called “senior certification.” Humphrey intends to work to make sure that financial advisors do not mislead older investors by telling them that they specialize in seniors.
Another questionable investment strategy is the use of reverse mortgages, which are comprised of hard to understand terms and high fees. Humphrey intends to address the issue of reverse mortgages along with other scams and fraudulent sweepstakes directed at senior investors.
According to Humphrey’s blog post regarding his new position, the Office of Older Americans will give seniors the tools they need to detect financial scams and make informed financial choices.