How older investors are manipulated by financial ads

Josh here – Some of the more egregious advertising practices keep popping up on the web and in print because they work. This is not limited to products, it also applies (perhaps even more so) to the realm of newsletter and subscription services.

Many financial products are advertised by playing to the emotion of excitement – you will get rich, you will be right when all others are wrong, you will earn an incredibly high income yield, you will double your money, etc.

Other ads go the other way and trigger the fear emotion – you will escape from rising rates, you will protect your capital from the imminent crash, you will survive the meltdown of the US dollar or the economy. 

FINRA’s Investor Education Foundation teamed up with researchers from Stanford University and the AARP to see what the effects of these types of ads would be on investors of different age groups. It turns out that older people were more apt to want to act on an advertised pitch if one of these two emotions was being used to sell…


WASHINGTON, DC – Financial fraudsters often attempt to evoke strong emotions in their victims to convince them to hand over money, and seniors may be particularly vulnerable to the effects of heightened emotions on decision making. With funding and research participation from the AARP Fraud Watch Network and the FINRA Investor Education Foundation, psychologists at Stanford University found that inducing emotions in older adults increased their intention to buy falsely advertised items.

The research team – Ian Gotlib, Ph.D., Katharina Kircanski, Ph.D. and Nanna Notthoff, Ph.D. – examined whether inducing excitement and anger increases susceptibility to fraud in older adults (ages 65-85) and younger adults (ages 30-40). The team used a laboratory task to induce participants to exhibit excitement or anger; a control group was not induced to exhibit any particular emotion. Participants then viewed eight different advertisements that had been designated by the Federal Trade Commission as misleading. For each one, participants were asked to rate the believability of the content and the likelihood that they would purchase it if cost were not a consideration.

In older adults, both excitement and anger increased intention to purchase the items compared to no emotional arousal. In younger adults, however, there were no significant differences in intention to purchase, suggesting that heightened emotion did not have an effect on younger adults’ susceptibility. Further, whereas in younger adults greater advertisement believability was associated with greater intention to purchase, believability and purchase intention were not significantly related in older adults. The findings suggest that older adults’ intention to purchase was not based on perceived credibility, but rather on the emotional states they were experiencing. Another insight is that the direction of the emotional state – positive or negative – didn’t matter, an indication that both emotional states have a broad influence on older adults’ susceptibility to fraud.


FINRA Investor Education Foundation

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