Fighting Fraud 101 - Smart Tips for Older Investors

Even if you have never been subjected to an investment fraudster's sales pitch, you probably know someone who has. Following the legendary Willie Sutton principle, fraudsters tend to go "where the money is"-and that means targeting older Americans who are nearing or already in retirement. Fraudsters also have in their sights the millions of Baby Boomers who have been accumulating sizeable retirement nest eggs through company 401(k) plans and personal accounts.<br /> <br /> <B>The Face of Investment Fraud</B><br /> Recent research has shattered the stereotype of investment fraud victims as isolated, frail and gullible. Do you know anyone who meets the following description?<br /> <br /> Self-reliant when it comes to making decisions <br /> Optimistic <br /> Above average financial knowledge <br /> Above average income <br /> College-educated <br /> Experienced a recent health or financial setback <br /> Open to listening to new ideas or sales pitches <br /> <br /> If so, you know someone who fits the profile of an investment fraudster's prime target.<br /> <br /> <B>The Psychology of a Scam</B><br /> We've all heard the timeless admonition, "If it sounds too good to be true, it probably is"-great advice, but the trick is figuring out when "good" becomes "too good." There's no bright line. Investment fraudsters make their living by making sure the deals they tout appear both good and true.<br /> <br /> They're masters of persuasion, tailoring their pitches to match the psychological profiles of their targets. They look for your Achilles' heel by asking seemingly benign questions-about your health, family, political views, hobbies or prior employers. Once they know which buttons to push, they'll bombard you with a flurry of influence tactics, which can leave even the savviest person in a haze. Some of the most common tactics include:<br /> <br /> <B>The "Phantom Riches" Tactic </B>