PFP2434. Editor’s Choice: The Perils of Advising an Older Accredited Investor

Editor's Choice is the presentation of a feature article that showcases the cutting-edge research and insights of a leading scholar in the field of financial planning. Please join us for an interactive session with American College’s Michael Finke who will present his recent article from the Financial Planning Review, _The unsophisticated “sophisticated”: Old age and the accredited investors definition_. The presentation reviews the research on age and decline in financial decision-making capabilities and discusses the policy and practice challenges to advising older clients. Financial advisors need to be aware of the challenges and risks of advising older clients who are accredited investors and provide appropriate guidance and education. Being an accredited investor does not mean being a savvy investor. Older investors are, on average, more likely to meet accredited investor thresholds and, yet, may face more challenges and dangers than younger ones if they have lower financial literacy or deteriorating cognitive ability. Older investors may therefore by more vulnerable to fraud, exploitation, or poor outcomes in the market for unregistered securities. Learn about the current definition of accredited investor and its implications for older investors. We will present evidence from our study that shows how older accredited investors are less likely to have high financial sophistication than younger nonaccredited investors. We will also explore ways to protect and educate older accredited investors and improve the screening mechanism for unregistered securities.

Learning Objectives:

• Identify the factors that influence the financial sophistication and decision making of older investors, such as financial literacy, cognitive ability, and susceptibility to fraud
• Apply the findings from the study to assess the level of financial sophistication of their older clients who are accredited investors
• Recommend strategies to protect and educate their older clients who are accredited investors and advocate for a more nuanced screening mechanism for unregistered securities