Seniors lead financial literacy
It’s been a long time coming. Five years ago, during the midst of the financial crisis, the federal government introduced a new Task Force on Financial Literacy, which recommended “urgent action on a national strategy to strengthen financial literacy.”
This week, newly appointed financial literacy leader Jane Rooney said she will start with seniors, asking for input from the industry and others on how to “better understand the unique challenges faced by seniors …and to ensure that we implement a national strategy that will respond to seniors’ needs.”
Ms. Rooney’s initiative is timely. According to Statistics Canada, three out of 10 Canadians is a Baby Boomer, born between 1946 and 1965. Canadians aged 49 to 68 represent a generation that is close to retirement or already retired. These Canadians are at a point where they are vulnerable to not only their trusted financial advisors, but also to their own flesh and blood.
According to the Ombudsman for Banking Services and Investments (OBSI), just over half of complaints received relate to people over the age of 60. This is especially concerning since any financial loss suffered at this age and stage may be hard to recover from.
Seniors can become the target of unscrupulous financial advisors because they have money to invest and are therefore profitable clients, but also because they tend to be surprisingly less well-versed in money than younger clients. In the 2009 Canadian Financial Capability Survey, seniors scored lower than younger Canadians in a number of key areas. The combination of profitability and gullibility can be tempting to advisors who are putting their own retirement ahead of that of their clients.
Statistics on elder financial abuse are difficult to gather because not only can it sometimes go undetected, but even when it is detected, it may remain secretive so as to avoid embarrassment or conflict within a family.
The B.C. Centre for Elder Advocacy says that about three-quarters of the calls to their toll-free line relate to elder financial abuse. And the Canadian Association of Retired Persons (CARP) reports that one-quarter of the respondents to a CARP survey knew someone who had suffered financial abuse.
Seniors need to be careful about whom they trust with their money — their kids included. Taking the time to become financially literate is the first step. But beyond that, it probably makes sense to run financial decisions by multiple sources. That might mean their financial advisor and their accountant or it might mean their son and their sister. At least that way, there’s a validation process or vetting of advice to ensure that seniors aren’t just another statistic.