Financial exploitation is typically associated with groups like the elderly, college students and immigrants—but Native Americans living on reservations are also vulnerable.

Settlements between tribes and the federal government have led to an influx of wealth, but reservations often lack access to financial services, exposing residents to fraud and abuse. “There’s a lot of money coming into historically cash-strapped communities,” says attorney David Armstrong, director of the Indian Law Office at the non-profit Wisconsin Judicare. “There’s a segment of the population that will spend that money immediately, but others will see an influx of money. This is a good time for them to invest, but a lot of these folks don’t know about investment because nobody markets to them.”

In April, Finra and the non-profit First Nations Development Institute issued a joint investor alert, “New Money Coming Into Indian Country: Plan for the Long Term,” warning Native American recipients of new wealth of potential fraud on reservations.

The newest money comes from recent court settlements: In the 1990s, Elouise Cobell, a Blackfoot banker, uncovered mismanagement of native funds held in trust by the federal government, resulting in a $3.4 billion settlement. The first portion of that money compensated for profits from federal logging, grazing and mineral exploration leases. The next $2 billion will buy back interests in the land to reduce fractionalization among native populations.

But this isn’t the first influx of money into Indian Country. “There’s this perception that this is new wealth, but many tribes have been doing well for some time,” says Dante Desiderio, executive director of the Native American Finance Officers Association. “There were previous settlements. There’s been economic development. In many cases, these funds are distributed among members, not held by the government.”

Because land is often commonly held, tribes make payments to members, typically in a monthly check.  “Tribes have to have a law about how they are going to make the payments, and the law has to provide for minors and incompetents,” Armstrong says. “The money builds up in accounts that the tribe manages, and to access the disbursements members have to be 18 years old and have a high school diploma.”

Accrued money is often paid to 18-year-olds as a large lump sum, Armstrong says, and can come with no restrictions. “A check is literally cut and handed to them,” Armstrong explains. “One of the problems is that taxes are not withheld, so they end up running into consequences with the IRS. Families might know to expect the hit, but imagine explaining that to an 18-year-old boy with $300,000 dollars that he didn’t have yesterday.”

Armstrong says that many Native American children have never experienced life without federal payments and assume monthly checks will continue indefinitely. Others, who grow up amid disproportionate poverty, have had no exposure to planning or budgeting.

“People are most likely to access advice from family members, but in some places this is the first generation to have large amounts of money,” says Sarah Dewees, director of research, policy and asset building at the First Nations Development Institute. “Mixing young people with large sums of money is often problematic. Look at the young athletes who end up in bankruptcy and the research that shows lottery winners, on average, end up worse off than before.”

Larry Jones, a financial consultant for San Diego-based Retirement Benefits Group, specializes in developing wealth-building strategies for native tribes. “In many of these cultures, saving for retirement or the near future is not something they strive for,” Jones says. “There’s a sea change among tribal governments in getting people to think about planning and saving, especially because they have funds coming in that they have never had before.”

Armstrong says wealth is also arriving from other sources, including casino gaming, other tourism revenues, agriculture, and mineral and gas exploration. Some tribes pay out more than $100,000 annually to members.

“Baby boomers who left the reservation when they were young or were raised in cities are retiring and moving back to take advantage of benefits like medical care and tax exemptions,” Armstrong says. “These folks return with a portable wealth portfolio that you would expect any retirement-age professional to have.”

On reservations, fraud generally takes the same form as it does in the rest of the country.

“When the first round of Cobell payments came out, payday lenders and pawnshops sprung up overnight,” Armstrong says. “We’re seeing people get creative, offering to help access disbursements through ‘Nigerian Prince’ scams that ask for personal information.”

Desiderio says fraud extends to other financial services. “Even with tax preparation, very few people serve the tribal community,” Desiderio says. “Few people guarantee loans, there has been a big effort to mitigate that. There’s just not big competition. Without that, there’s a tendency for people to come in without the best intentions.”

Jones says that some Native Americans distrust the financial services industry because of past behavior. “In many cases, financial organizations don’t offer a fair bill of goods to these clients,” Jones says. “Several years ago, a large company had set up a plan for a tribe I work with, but never followed-through to allocate and diversify the investments. The tribe ended up in a money market fund for 10 years and made no money.

“The Hopi litigated a similar issue,” Jones says. “They asked for long-term, low-risk investments, but the advisors opened up margin accounts and invested in hedge funds. This happens because of a mishandling of funds and a lack of transparency, but it’s also because tribes don’t ask the right questions and monitor their investments.”

The vulnerabilities aren’t limited to Native Americans, Dewees says. “Low levels of financial literacy are common; most people are not very good at managing their money,” Dewees says. “It’s exacerbated in Indian country because there’s a lack of access.”

The Native American Finance Officers Association hopes focusing on better financial stewardship among tribal government leads to better literacy among tribe members, Desiderio says.

“If leaders value that skill set and take it on themselves to be financially responsible, it trickles down,” Desiderio says. “If they see the problems in their tribe and make financial literacy important on a tribal level, they in turn will make sure that individual citizens have access to financial literacy programs.”

Tribal governments, often at the recommendation of advisors, are attaching conditions to their disbursement plans and the “18 money” that comes from minor trusts. “We set up a longer distribution plan: At 18, members can start to take 10% of their disbursements per year,” Jones says. “At 29, whatever is left is distributed to the recipient.” In some cases, the disbursements can only be released to pay for education expenses until the recipients reach a certain age.

But the demand for services at the family level still presents an opportunity for enterprising advisors. “I think there’s a strong, untapped demand for professional financial services,” Armstrong says. “People have a desire for advice, but aren’t necessarily directly articulating it.

Dewees encourages financial advisors to reach out to tribal councils. “I would also encourage advisors to find financial education resources that resonate with young people,” Dewees says. “I would make a case for why they have cultural sensitivity to the unique issues faced by native peoples. It is an opportunity because financial markets are confusing and people need assistance managing these resources. There are tribal governments open to working on these issues with advisors.”

In some cases, the intersection between Western and tribal cultures can be difficult for outside advisors to navigate. “Most financial literacy programs don’t fit with the values of the tribal community,” Desiderio says. “If you make the programs culturally appropriate, more people might take to them. In tribes, the financial need is less important than community need. We want to help everybody out, the factor of wealth or lack of wealth is less important for us.”

With that should come an understanding that most native cultures are focused on a more distant future than advisors are accustomed to. “Are your products investing for the next seven generations? How does our concern for both the elderly and for future generations fit in with Wall Street?” Desiderio says. “Our time lines are different, they may be leaving out investments or suitability factors, or failing to consider our different risk tolerances. We are not as interested in making sacrifices for rapid growth and larger returns.”

Advisors like Jones have seized on the opportunity, and firms like Bank of America and Wells Fargo already have native-oriented practices, but demand for services remains high, Desiderio says.

“It’s becoming a trend for financial institutions to be more in tune with the needs of tribal governments,” Desiderio says. “It’s an opportunity for advisors to try to understand the tribal needs. It is an interesting and rewarding path, but you have to understand the community. Just coming in and thinking that because you are there, you’re going to get business is a fallacy.