Massachusetts Cracks Down on Abusing the Elderly’s Financials

The Financial Industry RegulatoryAuthority, the Massachusetts state regulatory body, is scrutinizing nontraditional, illiquid investments that somefinancial planners are selling to elderly that lack sophistication ininvesting. Reports show that the elderly are particularly susceptible to beingtricked into investing into a real estate investment trust that will not beliquidated without a huge penalty or even realized before the elder’s death.

91-year-oldAlice has experienced this issue. Her previous financial advisor had taken 10%of her assets and put them into a real estate investment trust. The problem isthat the funds cannot be removed without a substantial penalty for the next 12years. Between the advisors commission and the penalty, not much is left. Aliceis a middle class independent woman and was relying on her savings availabilityto pay for her care. Alice claims her advisor did not disclose the drawbacks tothe investment he chose for her. The advisor explains he explained theramifications of investing in such a trust and claims that Alice chose toinvest ” for the benefit of her heirs.”

See Carolyn Rosenblatt Financial Elder Abuse By A Broker-Dealer For Mom, Forbes,  Jul. 18, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.