Is There More Protection for Senior Investors Today?

Seniors are often targeted for identity theft and can even be vulnerable to ageism that threatens financial security. However, there are organizations trying to protect seniors from financial fraud and financial abuse. Learn what some organizations are doing to try to protect seniors.

A recent study done by the North American Security Administrators Association (NASAA) evaluates financial industry standards and whether they protect senior investors. Learn what they found and what needs to be done to protect America’s aging population.

Seniors and Financial Abuse

Five million older Americans are financially exploited every year by scammers and that number is expected to increase as baby boomers age and their ability to manage personal assets diminishes. In fact, one study estimates that seniors lose as much as $36.5 billion per year to scammers.

The U.S. Centers for Disease Control and Prevention considers elder exploitation a public health problem, citing a previous study that found seniors who suffer financial exploitation die at a rate three times faster than those who have not experienced financial abuse. More than stealing money, financial exploitation is deceptive, manipulative and can have a profound effect on its victims – and their families.

NASAA Study on Broker-Dealer Practices for Senior Investors

In light of these staggering statistics, NASAA conducted a study to understand how financial brokers are protecting senior investor clients. Researchers sent questionnaires to more than 60 broker-dealers that had 18 questions regarding how the firms’ practices and policies cared for senior investors. The survey revealed unique insight into five key areas including supervisory procedures, training, escalation and reporting of senior issues, resolution of senior issues, and use of the trusted contact from.

Questions sent to broker-dealers included:

• Does your firm have a formal policy defining senior customers and if so, what is the age used in that policy?
• Does the firm have a department, committee, task force or other group or person responsible for identifying and addressing senior-related issues?
• Does the firm have a policy to collect the identification of a trusted or emergency contact person?
• Are additional documents required when opening or updating accounts for senior customers?
• How frequently is the investment objective of a senior customer reviewed, updated, and documented by the firm?
• What is the process to report concerns regarding potential diminished capacity and/or elder financial abuse?

Key findings of the study revealed that:

• 54 percent of the broker-dealers lacked a formal policy defining “senior customers.”
• 34 percent of respondents had a dedicated team responsible for senior-related issues.
• 90 percent had either a dedicated team or another internal process for addressing senior issues.
• A scarce 30 percent had created senior-specific policies and procedures.
• 95 percent had some kind of training on senior issues, particularly in recognizing signs of elder financial abuse.
• Only 41 percent had developed a form for customers to identify an emergency or trusted contact person.
• 94 percent had a formal process to internally report concerns about diminished capacity and elder financial abuse.

NASAA Advocates for Senior Investors

NASAA has launched a website, ServeOurSeniors.org that is dedicated to providing resources that protect seniors and their caregivers from financial abuse.

According to the website, “NASAA and its members have been in the forefront in detecting the problem of senior investor abuse and responding to it aggressively with innovative regulatory solutions, targeted enforcement, investor education and publication of best practices for serving senior investors.”

Additionally, NASAA is encouraging financial advisors and firms to address gaps in policies for senior investors. They are encouraging firms to provide the following:

• A clear definition of “seniors” and “vulnerable adults”
• Dedicated staff or team responsible for senior-related issues
• Clear guidance for communications with seniors
• Updated account documentation for seniors
• Increased suitability review for seniors that includes red flags like high risk investments, account concentrations and other changes to account activity
• More training on senior-specific issues
• Use of a trusted contact form
• Clear and appropriate escalation protocols
• Guidance on reporting concerns to adult protective services

If you or a senior loved one is feeling threatened or being financially abused, reach out to a trusted fiduciary financial advisor today. Fiduciary advisors can be your trusted advocate and help you understand the impact of financial scams on retirement planning and personal health and well-being.