Seniors are among the most vulnerable of investors – and a new advisory panel is being assembled in Ontario to assess how to better protect their assets and interests. After nearly a decade of lobbying by the Small Investor Protection Association, the Ontario Securities Commission is seeking members for its newly established Seniors Expert Committee to advise on issues facing older investors.
“The Seniors Expert Advisory Committee will give the OSC access to a multidisciplinary team of experts on issues related to older investors, providing us with valuable input on our seniors strategy, an important initiative for the OSC,” said Maureen Jensen, Chair and CEO of the OSC. “The committee builds on our ongoing efforts to better understand the unique needs of older investors.”
SIPA member Ken Kivenko says the need for such a committee is long overdue, as there are a number of sophisticated exploitation methods targeting the elderly.
“We saw the need because there were a lot of reports coming in about diminished capacity,” he says. “It’s not just dementia – it’s lots of things: energy levels, being alone, widows and widowers – they’re often isolated or in a retirement home – they’re easily more vulnerable – they don’t have anybody to consult with.”
“In addition, they are the target, because that’s where the money is – there’s a disproportionate amount of money with retirees.”
He says for many older investors, transitioning from a growth account to a de-accumulating one such as a RIFF can be challenging. “It takes a whole new level of knowledge; you almost have to become a pension guy,” he says. “How am I going to let this last as long as this person is expected to live? You have to change your risk profile, you have to change the risk tolerance, you have to have tools for simulating the account.”
Beyond proficiency, seniors often fall victim to predatory fee structures – often in a completely legal context.
“Fees become tremendously important. If the fees are too high, the money will disappear very fast, and there’s no new money coming in,” he says.
“We’ve heard a lot complaints from people who’ve been told they need to go into a fee-based account when they get older, because if you’ve got a million bucks and they’re going to move you into a fee-based account at 1.5% - well instead of a thousand paid in fees, it becomes $15,000 for a fee.”
“That kind of exploitation, it’s elegant. There’s no rule against it, so nobody gets sanctioned, there’s no penalty, but these people are losing $15,000 per year for fees.”