By now we are experienced and supposed to have some wisdom, especially when it comes to money. But we can be taken in just as easily as anybody. Here are what I think are some of the main reasons seniors are susceptible to investment fraud and the people who perpetuate them.

• Fear
• Trust
• Notoriety
• Personality

Fear

It’s not death that we fear, although we don’t look forward to it, but the fear of not having enough money to last us until we die. Running out of money is what really scares us.

So we read economic news from the U.S. and around the world and become afraid that our nest egg, which may have begun the day as a jumbo, is shrinking down to the size of a Robin’s egg.

Whatever gets our fear going, the person behind the investment fraud knows that it’s lurking somewhere deep within us. The scammer preys on it by telling us they have the solution. That solution is always some sort of security blanket that will protect our nest egg. And their solution, they tell us, is sure to offer the protection we need to make that nest egg last forever. Our fear is assuaged, and they move in for the kill.

Soon we are left with a nest and no egg at all. Our money is gone and it’s replaced by an even bigger fear. The fear of survival.

Rule 1: Don’t let them smell fear!

Trust

Over the years we’ve learned that some people in organizations are trustworthy and some are not. The scammer wants to put him or herself in that trustworthy category.

One way they can do this is to align themselves with an organization or group we already trust. This might be a religious organization, a large organization we do volunteer work for, or even a small group such as investors club. The scammer, through hook and crook, wins key influencers within these organizations over, even if it has to be done one person at a time.

We see that others in the group seem to know and trust this person and since we trust them we go along willingly. It’s nice to have friends. But sometime that comfortable feeling can lead you right into the arms of the scammer who has been playing the group.

Rule 2: Trust is great. Due diligence is better.

Notoriety

Sometimes the scammer will use the fact that we’ve all heard of someone to gain our trust. They know senior citizens can recall people who, although no longer in the top tier of fame, still hold a place in our memories from earlier days.

The scammer attaches this person to their investment, taking advantage of their fame and our remembrance of the good old days when they were famous. It makes us think that the scammer knows where we’re coming from.

For your information, the SEC doesn’t allow investment advisers who are registered with them to use testimonials of athletes or celebrities. What’s more, just because someone we remember tells us that an investment is a good deal, doesn’t make it so. In fact, it’s illegal for the scammer to use them to recommend the investment.

Rule 3: Respect the formerly famous. Don’t buy from them.

Personality

Throughout our years we’ve all met people who instantly dazzle us. Their smile, their knowledge, the way they hold themselves, all contribute to what we say makes a great personality. They are dynamic and we instantly want to be in their circle of friends – the “in” crowd.

An elite corps of scammers, who are probably sociopaths, pride themselves on developing and honing this dynamic personality. When we meet them or listen to them their charisma entices us and turns off all those detectors that would make us question anyone else making the statements these people make.

We fall under the spell and give our trust unconditionally. Meanwhile, the scammer is basking in our glow and getting ready to count our money.

Rule 4: Fall in love with your spouse or partner, not someone you’re going to invest with.

Think about the investment mistakes you’ve made. Was it one of the above reasons that let you so willingly write that check?