Investing for old people

John_s_g

Why do banks not want money invested by 90+ year old people. My mother has now sold her house but we are finding that some banks are just turning her away and do not want her money.

Lokolo

Most likely risk of being mis-sold is higher so they don't want to risk it!

Depending on the amount it may be wise to spread it across a number of banking insitutions.

xylophone

We have a relative of the same age - she hasn't encountered any problems.
(Just a thought, in view of her age, has your relative thought about a Power of Attorney? http://www.direct.gov.uk/en/Governmentcitizensandrights/Mentalcapacityandthelaw/Makingarrangementsincaseyoulosementalcapacity/DG_185921)

I am assuming that there are no problems about providing proof of identity? I take it that she has a current account? At the very least the money could be placed in a deposit account while matters are sorted out?

With which financial institutions does your mother wish to place her money? Has she tried BM or Chelsea? Our relative has used both without problems.

http://www.ageuk.org.uk/scotland/money-matters/money-management/savings-advice/

i1189

I stood for ages in the queue yesterday behind a man having this exact argument with the cashier at a building society yesterday. The lady in question would have been 88, and the investment was for 5 years. Quite rightly the cashier gently tried to explain that none of their staff would be be able to do this as it just wouldn't be ethically sound.

Basically if you are investing a large sum in the stock market, it would generally be for the long term. The value of the investment (especially in the volatile climate at the moment) can quite easily go down as well as up, especially in the short term.

It would be unethical of a bank to take money from an older person who has far more likeihood of dying before their investment is mature, and therefore losing money. This would also be likely to lead to a mis-selling claim from the person's estate.

If you are determined to invest this money I would suggest a self-invest account, like iii, but I would make sure all the legal aspects such as power of attorney are covered first.

xylophone

Our relative has just added to her holding of BT shares, has a stocks and shares ISA, opened fixed rate cash ISAs with no problems at the ages of 88 and 90... is a Trustee of a family trust .. She might not be able to run a marathon but she's "all there with her hat on....." I should say that her father lived to his 96th year and her maternal uncle to his 95th.

alanq

The terms "savings" and "investment" seem to be being used interchangeably here. I see no reason that an elderly person who has adequate other funds should not put money into a fixed rate savings account for a number of years. It could make sense as it could provide a guaranteed monthly income. It is "adequate other funds" that could prove tricky if the saver needs later to pay for residential care.

Also a person who has adequate mental capacity should be able to trade shares hoping for capital gains. Locking into a 5-year+ investment linked product however I would have thought likely to be a bad idea.

The financial institutions cannot win. If an elderly person goes into a meeting alone agrees to everything signs on the dotted line and investments lose value the institutions are accused of taking advantage of a vulnerable person. If they refuse to accept the elderly persons' money or insist that they are accompanied by family members they are accused of age discrimination.

grey_gym_sock

well, if an elderly person says that the purpose of a 5-year investment is that, if they live at least 5 years, they might then want to spend it, but if they die first, they'd like their heirs to benefit from having it invested rather than just in savings accounts, then i don't see why there'd be a problem.

so long as the investment doesn't incur penalties if they die before the 5 years is completed.

if you've only got about enough to support yourself for the rest of your life, you'd want to avoid investments. but if you expect to have plenty over for your heirs, why not start investments which they might continue?

GeorgeHowell

If the banks only offered suitable products -- ie for a very elderly person involving nil or negligible capital risk -- then they would have nothing to fear. But they don't know how to do that because they are so hung up on flogging products that are to their advantage and which help their staff to meet targets.

A solution might be to use internet banking where by the nature of the beast there is far less of this a**e-covering B/S involved in opening accounts. The lady in question may not be at all au fait with the internet, but a trustworthy relative can "hand-hold" her through it and then help her to operate the accounts. I know, I've done it.

Biggles

xylophone wrote: »

I am assuming that there are no problems about providing proof of identity?

That was the only problem my mother had with banks & building societies.

At the age of 92 she'd never had, or seen the need for, a passport or a driving licence, and bank staff seemed to run out of alternative ideas at that point.

le_loup

That is a major problem. Some of them will accept pension uplift letters amongst other things.

i1189

grey_gym_sock wrote: »

if you've only got about enough to support yourself for the rest of your life, you'd want to avoid investments. but if you expect to have plenty over for your heirs, why not start investments which they might continue?

This is not always possible - my mother recently inherited money which had been held in the form of investments. She would have liked to have kept the investments intact until they were favourable, but due to inheritance rules she was forced to disinvest, resulting in a loss.