Help retired clients avoid high-pressure sales tactics

Retirees often fall victim to scams and high-pressure sales tactics since as a group, they’re one of the few willing to listen to the telemarketers’ pitch. If that happens, an advisor might be one of the few people to turn to for help.

Advisors need to be sensitive to the psychology and life-stage perspective of retirees. While this is not something many financial planners are trained for, Jane Brady, attorney-general and district attorney for the state of Delaware, says advisors must recognize the toll of loneliness and other emotional distresses experienced by many retirees if they are going to be effective.

Loneliness and other stresses make retirees susceptible to cheery telephone pitches, she explained, which is why telemarketers often call at dinner time. “The reality is there is nothing lonelier than sitting across the table from a chair that didn’t use to be empty,” Brady said during a press briefing at a recent retirement conference in Washington D.C. “You’re missing someone you love and a friendly voice on the end of the line perks you up.”

Brady used the example of a Delaware woman who recently contacted her for help. This woman got a telephone pitch from an individual purporting to be with “a Canadian lottery” that asked for $2,000 in order to qualify for a $160,000 prize.

National sweepstakes clearing houses are one of the top vultures preying on retirees through the mail. “There are things about getting mail, having contact and the excitement of maybe winning something that appeal to them,” Brady said. She added that during a recent investigation many customers of a well-known sweepstakes clearing house, which also operates in Canada, were retirees.

The ploy often has the desired effect, said Roy Vokes, president of Vaughan-based Agora Financial Services who became aware of the impact loneliness has on retirees while acting as a volunteer board member at a retirement home. “They keep sucking them in — every time they send a bit more money they get another plastic dollar or something,” he explained, referring to worthless prizes typically given by these companies.

Being an advisor working with retirees means being available for counseling, even when there is no compensation, explained Vokes. He encourages retirees to call him whenever they receive a suspicious telephone call or mailing.

One of Vokes’s clients recently fell for another well-known sweepstakes clearing house operating across Canada that raised the stakes with each mailing. “To keep your name on the winning list you have to buy whatever they’re selling that month. They’re just clearing out junk.”

This client has been sucked into various marketing pitches for years, he said. “She’d say, ‘Yeah I could use another set of steak knives,’ even though she already had more than enough,” Vokes said. “It’s not as if she’s spending on herself. She’s really spending on the dream [of winning the sweepstakes].” It took Vokes several conversations with his client before she agreed to stop sending money.

Advisors can help identify money spent on scams or unnecessary merchandise by encouraging their clients to set up a detailed budget and then using that information to survey past expenses. “When you do that, you open up a lot of conversational doors and you may spot something,” Vokes said.

This is not an easy task. An advisor will need all of his or her powers of diplomacy to elicit the facts from retirees who often fear divulging a financial mistake will call their judgment and independence into question. “Seniors often worry that they are going to be viewed as not having the capacity to manage their affairs and lose their independence,” Brady explained. That tension plays a large part in the decision to confide in an advisor, she added.

Even legitimate telemarketers can often be difficult for seniors to handle. The loneliness factor combined with a genuine desire to compensate for the inability to make charitable donations during child-raising years leaves retirees susceptible to otherwise bona fide but high-pressure pitches, noted Vokes. The problem occurs when retirees get swept up in the pitch and promise donations too large for their pocketbooks. One of his clients received a bill for a donation, panicked and tried to put the onus on Vokes to resolve it. “Can you phone them and make it so that I don’t have to pay them?” he said, recalling the woman plea to him.

In these situations, Vokes discourages the client from making donations from limited funds. Instead, he tries to resolve the problem by suggesting that the client leave one larger donation in his or her will.

According to the Delaware attorney-general, one solution for unwelcome telemarketing calls, whether for scams or bona fide products and services, is to record an outgoing message saying: “Hi, I’m not available to answer the telephone right now. If this is a telemarketing call, leave your telephone number because my friend the attorney-general would like to talk to you,” she said, adding that telemarketers always take the hint.

If a client has had trouble with telemarketers in the past an advisor might also want to suggest: “Hi, I’m not available to answer the telephone right now. If this is a telemarketing call involving something that I do not need or want and probably can’t afford, please leave your name and telephone number so that my financial advisor can talk to you. He/she will want to discuss it with you in detail.”

The result will likely be the same in Canada as in Delaware.