We often think about individuals in their 80s and 90s and even centenarians as the targets of financial fraudsters. Yet baby boomers, just like their counterparts in the Silent Generation and the Greatest Generation, face increased risks from cyber scams and fraudulent schemes targeting retirees. It may seem unnatural to think of Woodstock attendees and “American Bandstand” viewers as senior citizens, but boomers now range in age from 78 down to 60. Financial advisors can play an important role in helping protect them from these threats.
Why Baby Boomers Are Natural Targets
Baby boomers control a substantial share of the nation’s wealth, making them prime targets for scammers. Many of these individuals have accumulated significant assets across retirement accounts, real estate and investments. According to Federal Reserve data cited by Visual Capitalist, Baby Boomers hold $78.1 trillion — approximately half of the $156 trillion in total U.S. household wealth.
Many boomers rely on digital platforms to manage their assets — an area in which they may lack full fluency. PYMNTS, a data and news source regarding payments and platforms, found that baby boomers and seniors are the fastest-growing demographic in terms of online engagement. Yet a recent ConsumerAffairs study found that 91% of baby boomers and Generation-Xers feel overwhelmed by technology. Scammers exploit this gap in digital knowledge through phishing, identity theft and other cyberattacks, leaving Baby Boomers particularly vulnerable.
Another key factor is generational trust. Boomers, born between 1946 and 1964, grew up in a time when face-to-face interactions were the norm, and scams were less sophisticated. They are often more trusting of authority figures, which leaves them exposed to criminals posing as IRS agents, technical support, or even family members. According to the FBI’s 2023 Elder Fraud Report, over 100,000 baby boomers reported that they were victims of financial scams in 2023. This contributed significantly to the $3.4 billion in total losses from financial scams last year. These staggering figures underscore the urgency of addressing the problem.
Common Scams Targeting Baby Boomers
To effectively protect baby boomers, financial advisors must be aware of, and understand, the most prevalent scams. Imposter scams are widespread, with fraudsters posing as government officials and threatening false claims of unpaid taxes or Medicare issues. These scams often rely on fear and confusion, manipulating victims into compliance.
Tech support scams are another frequent tactic. Scammers convince seniors that their computers are compromised, charging exorbitant fees for “fixes” to non-existent problems [and getting their victims’ financial information]. The seniors’ unfamiliarity with technology often works against them in these scenarios.
One of the most emotionally and financially devastating scams is the romance scam. Here, scammers build an emotional bond with the victim, sometimes over the course of months or even years, before requesting money. With boomers increasingly active on social media and dating platforms, these scams have become more common.
Lastly, investment fraud poses a significant risk. Boomers, eager to grow their retirement income, are susceptible to Ponzi schemes, fraudulent real estate deals, and too-good-to-be-true investment opportunities. These scams promise security but often end in substantial losses, devastating retirement savings.
Financial Advisors as a Line of Defense
Financial advisors are uniquely positioned to prevent fraud by recognizing early warning signs. Advisors who know their clients’ financial habits can detect suspicious activities, such as sudden large withdrawals or requests for wire transfers to unfamiliar accounts. Frequently reviewing financial statements and maintaining open communication are essential to spotting irregularities before they cause serious harm.
Education is another vital aspect of the advisor’s role in protecting boomer clients from fraudsters. Many boomers are unaware of the modern methods scammers use, particularly in the digital world. By educating clients on common fraud tactics — such as unsolicited calls, emails or requests for personal information—advisors can help clients become their own first line of defense.
Create a comfortable environment for your client to call anytime they are uncertain about an email request or phone call they receive. Additionally, advisors can recommend using multi-factor authentication to add an extra layer of security to financial accounts.
Practical Steps for Protecting Clients
In addition to education, financial advisors should implement specific strategies to protect their clients. One key step is to ensure that powers of attorney are in place. Involving trusted family members in financial decisions can create an additional layer of oversight, ensuring that suspicious activity is flagged and addressed quickly.
Advisors should also recommend using third-party credit monitoring services that notify clients of any unusual activity on their accounts. This can help prevent identity theft before it escalates. Encouraging clients to place a freeze on their credit can prevent unauthorized loans or credit cards from being issued in their name, adding yet another layer of protection.
For clients facing cognitive decline, collaboration with legal professionals is important. Setting up guardianships or conservatorships ensures that their finances are protected even if they are no longer capable of managing them independently.
If a client has already been targeted by scammers, swift action is necessary. Advisors should work with their practices’ compliance departments to take actions to prevent further losses. Reporting the fraud to the Federal Trade Commission (FTC) or other relevant authorities can help mitigate the damage and prevent others from falling victim.
Cognitive Decline and Financial Exploitation
As baby boomers age, cognitive decline becomes an increasingly significant risk, making them even more vulnerable to financial exploitation. A study published in The Journals of Gerontology: Social Sciences in 2020 found that boomers are experiencing stronger cognitive decline than members of previous generations. Conditions like dementia and Alzheimer’s impair decision-making abilities, opening the door for scammers to take advantage. Financial advisors must remain vigilant in looking for signs of cognitive decline, such as clients becoming confused about their accounts or having difficulty understanding routine transactions.
Advisors should then proactively involve family members or legal representatives to provide oversight, ensuring that the clients’ best interests are protected.
Advisors Are Vital in the Fight Against Fraud
The threat of financial scams targeting baby boomers is severe, with the potential for significant financial and emotional harm. The average victim of elder fraud lost nearly $34,000 in 2023, according to the FBI.
Financial advisors can play a critical role in identifying and preventing these scams. By staying informed, recognizing early warning signs, and educating their clients (and their clients’ families), advisors can provide essential protection for their clients’ wealth.
Incorporating strategies such as regular account monitoring, legal protections, and involving trusted family members ensures a comprehensive approach to safeguarding clients from fraud. Advisors can not only secure their clients’ financial futures but also deliver peace of mind, reinforcing their value as indispensable partners in protecting their clients’ well-being during their most vulnerable years.
