Opinion

Felix Salmon

When the rich get old

By Felix Salmon
January 4, 2010

Mike Konczal today comes up with something which in and of itself is reason enough to set up a Consumer Financial Protection Agency: ageing boomers. As David Laibson notes,

the prevalence of dementia among Americans “explodes” after age 60, doubling every five years to more than 30% of the population over age 85.

These individuals are sitting ducks for predatory financial-services professionals, and it’s entirely right and proper for the government to step in and stop such thievish firms from extracting huge chunks of elderly people’s life savings.

The fact is that choosing a financial advisor is just as hard as picking stocks, and it’s statistically inevitable that millions of cognitively-confused Americans will choose badly. That’s not really their fault, and the CFPA, among other institutions, should hold all financial advisors to a strict fiduciary obligation, cracking down hard on those who end up costing their clients large amounts of money. This is not a role that bank regulators can or should have, and I certainly have no faith in institutions like Finra to grow any teeth when it comes to such matters.

So let’s get a CFPA up and running soon: the rich are becoming old fast, and that’s a potentially explosive combination.

Comments
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Back in the 1990s when I had hand-coded proto-blog I frequently mentioned this issue under the umbrella category of “hard time for white-collar crime.” And I’m sure if I’d had any readers it would have gotten a lot of traction.

Dementia hits hard in my family, much to the delight of generations of predatory “advisors” and employees. My great uncle, who might otherwise have funded my college education, instead wound up drained by a succession of… interesting choices. Including, most notoriously, a gardener who convinced him, after much consideration, to part with $10,000 to buy a bulldozer. To keep the driveway in better repair. According to his estate records these disbursements took place as often as once a week. No bulldozer was ever purchased. Which, of course, stands to reason as the driveway in question was in Brooklyn’s Ditmis Park neighborhood.

That was all 50 years ago. It was not a new pattern then, though, nor will it be any less new when the gigantic bolus of well-to-do boomers begin to pass into dementia. Best we begin working on the problem now before others begin working on us.

figleaf

Posted by figleaf | Report as abusive
 

Charities and other solicitors are also involved in this. Small potatoes, perhaps, but what audience do you think those magazines that send you a few free issues, then a subscription solicitation that looks like a bill, are targeting?

Particularly despicable was the major Alzheimer’s charity that sent my impaired grandfather solicitations for his “annual” donation on a WEEKLY basis for years, despite my father repeatedly demanding they stop doing so. They especially were in a position to know exactly what they were doing.

Posted by Brad9999 | Report as abusive
 

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