National Retirement Planning Week 2016: Division of Securities Shares Investment Tips

DENVER (April 13, 2016) -- Retirement planning has changed over the past few decades. It is now something that people of all ages and financial circumstances should be considering. Retirement planning involves more than just putting money away in an IRA and forgetting about it until you reach your golden years. At the Department of Regulatory Agencies (DORA), we help all types of consumers gain access to professionals and services that can help them prepare for retirement. The Division of Securities, part of DORA, provides investment-related considerations for National Retirement Planning Week, and encourages consumers to take five minutes to learn about pension scams, high risk investments, and considerations after losing a spouse.

Pension Scams

Pension programs are a great way to invest in your retirement. Sometimes when people get into financial difficulty, especially if retirement is still a long way off, pensions become an enticing way to get cash quickly. Whether you are providing funds to unlock cash advances or promising future payments in order to withdraw a lump sum, there are scams you need to be aware of that could result in more trouble than they’re worth.

In a common trick, scammers will offer to purchase the rights to cash entitlements, such as pensions, at a discount and then seek to sell interests in these rights to investors. The problem is that often, as is the case with U.S. government and military pensions, these entitlements cannot legally be reassigned or transferred. This becomes an issue when investors have already handed over money for shares in these entitlements and then find that the transaction is void. Of course, by this point the scammers are nowhere to be found.

Additionally, for those who trade their rights for a lump sum, there are often hidden fees and costs associated with this transaction. For example, sometimes scammers who offer to purchase these entitlements will require a “commission” or “fee” for their services that far exceeds what normal professionals would charge. In another scenario, tax-exempt pensions can suddenly turn into taxable income once withdrawn in a lump sum. Many people end up paying far more in commissions, taxes, or fees than what the payment was worth.

While this is sometimes a necessary action to take when faced with an emergency, the Division recommends you seek out other, safer, and more easily liquidated options for getting cash fast.

High Risk Investments

Would it surprise you to hear that the age group most susceptible to investment fraud is the “pre-retirement” group? Recent studies have found that around two-thirds of all investment fraud victims fit the same profile: 55 to 65 years old, well-versed in finance, and confident in their decisions. This seems perplexing, but regulators and researchers have figured out that the reason why this group falls victim most often to fraud is for two reasons: first, they are overly confident. They believe they can spot a scam a mile away, and therefore when a savvy con man comes along they are not prepared or watching for red flags. Second, and perhaps most important when it comes to retirement, is that they are trying to plan ahead to make their wealth last, and in many cases begin to panic that they won’t have enough to maintain their lifestyle.

It’s this panic that makes people extremely susceptible to fraud. Panic is an emotion that overrides reason, and can often make us choose unsuitable or unnecessarily risky investments. If you are ever approached with an offer that seems to hold the answers to all of your financial woes and worries, first, take a step back and check your emotions.  Never allow yourself to be pressured into a decision you’re not ready to make. Second, do some research. Check the license of the person recommending or selling the investment, and be sure that the product or offering is properly registered or exempt. Finally, assess whether it is truly a good option for you. Never risk more in an investment than you can afford to lose. In the long run, it just won’t be worth it.

Losing a Spouse

We all hope to be well into our retirement years before we have to face the loss of a spouse or significant other. However, it is never too late to have a conversation about finances, and to prepare for the eventual need for a partner who has sat in the background of financial decisions and management to take the reins. If you happen to be the half of your household that shies away from this role, consider two things.

First, losing a spouse increases a person’s vulnerability to fraud for the simple reason that scam artists know that emotions and confusion run high during that time. It is helpful to have a plan in place so that when the time comes you can let that plan take action, and you won’t be taken advantage of by an unscrupulous scammer.

Second, lack of understanding and confidence regarding financial planning and investing creates another huge target for fraudsters. We see many instances of partners who outlive their spouses, and do not know how to manage their financial affairs on their own. While many helpful advisers and account managers are willing to assist these people in what may be a new field of knowledge, many bad apples also take advantage of this lack of experience.

So even though it is an uncomfortable topic, be sure to speak with your spouse about a plan for the management of your finances before it is too late. It helps to have a relationship with an adviser well-established before this happens. But of course, when working with any financial professional, be sure to check their license and background, and always pay attention and ask questions about things you don’t understand. Staying informed is your best defense!

To research the license and background of a securities professional, visit or Contact the Division of Securities with any questions at (303) 894-2320, and visit for more tips on safe investing.