Investors 65 years and older need better protection

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In response to the needs and priorities of aging Ontario investors, the Ontario Securities Commission (OSC) released a report in March titled Seniors Strategy. The OSC defines a senior as 65 or older.

In the next 23 years the number of seniors in Ontario will increase to 25 per cent of the population.

With age comes a decline in cognitive ability. Research shows that financial decision-making is one of the first skill sets to become impaired.

This makes seniors more susceptible to financial exploitation and fraud.

These realities are compounded by many factors.

Fewer people retire with good pension plans, therefore they have to rely on their investments to provide retirement income.

During this long period of historically low interest rates more conservative investments like bonds and Guaranteed Investments Certificates are less attractive.

Most retirees hold a good portion of their portfolio in stocks or mutual funds that own stocks. Stocks have the potential of providing better long-term returns, however they are more volatile during the short-term.

As people live longer, their investment funds have to provide for a longer retirement period. And cognitive impairment continues to decline as seniors age.

Recognizing the challenges older investors often face dealing with financial services, the OSC will introduce guidelines and education for firms and advisers who work with seniors. The education will cover best practices when engaging and communicating with clients as they age.

Many associations representing seniors and the investment industry have responded positively to the OSC’s initiative.

While the industry moves forward to provide best practices for dealing with seniors there are things that individuals are encouraged to do for themselves.

Older investors are encouraged to involve their children, relatives, or trusted younger friends with their finances.

Good financial governance for seniors is a vital area and I encourage all older investors to address this issue.