Putting an end to elder financial abuse

In our ongoing dialogue with financial advisers, financial services firm executives and regulators across the country, one theme my colleagues and I at the Financial Services Institute have heard loud and clear is a shared, profound concern over the continued prevalence of elder financial abuse.
With baby boomers advancing further into retirement and the number of vulnerable older investors expanding, the trend is sobering: according to the North Americadn Securities Administrators Association, 34% of all enforcement actions taken by state securities regulators since 2008 have involved senior victims (in states that track victims’ ages). This is simply unacceptable.
Combating this persistent and heartbreaking problem will take a concerted effort by members of our industry — who are often on the front lines in spotting and potentially preventing elder abuse — as well as by state and federal legislators, regulators and many others. Without question, it will not be an easy task.
We can start, though, by working to establish better communication and closer coordination between members of our industry and regulators. One common concern we hear from independent advisers who see early indications of financial abuse of older clients is that they are unsure of the procedures to follow in reporting these signs. Although they want to do everything they can to protect their clients, advisers often find themselves confused by various state privacy laws that restrict disclosure of client financial information to third parties, including securities regulators and other agencies.
CONFUSION RESOLVED
The Federal Reserve, Securities and Exchange Commission, Federal Deposit Insurance Corp. and other key national regulatory bodies came together last year to clarify the steps financial institutions and advisers can take in reporting suspicious activity in older investors’ accounts to national or federal authorities with the aim of heading off elder financial abuse. The regulators’ joint Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults resolved much of the confusion institutions and advisers felt as they tried to tackle this critical problem while remaining in compliance with federal privacy regulations.
(See also: Wells Fargo gets aggressive to help advisers protect assets of elderly clients)
As welcome and helpful as this guidance was, however, it only provided clarity at the federal level. What advisers and their clients need now is similar guidance and clarity at the state level. We have provided comments on behalf of FSI members to NASAA on the importance of bringing greater consistency to the various state laws that govern investor privacy, and on how these laws can be improved to help advisers and institutions more effectively sound the alarm when they suspect possible elder abuse, while at the same time continuing to protect older investors’ confidentiality. We look forward to continuing our dialogue with NASAA on strengthening protections for our valued seniors.
We are also doing everything we can to provide FSI members with the resources and information they need today in order to take effective action when they suspect abuse. We recently launched our Elder Abuse Resource Center, an online tool that provides centralized, one-stop access to key information and guidance in all 50 states to help advisers identify the appropriate agencies to contact in cases of possible abuse, and to assist them in learning more about reporting restrictions in their state or in the client’s state of residence.
ELDER ABUSE RESOURCE CENTER
We developed the Elder Abuse Resource Center based on feedback from state regulators, FSI members and our own extensive research, and we look forward to continuing to broaden its scope in the future as a service to our members and to all the concerned professionals who hope to put an end to the financial victimization of our seniors.
At the same time, we are taking every opportunity to become more closely involved in ongoing policy discussions aimed at alleviating this problem. FSI will be represented on the advisory council to NASAA’s new Committee on Senior Issues and Diminished Capacity, enabling us to ensure that the voice of the independent adviser plays an important role in developing solutions and protections for senior investors in states throughout the country.
We and our members are also committed to advocating for stronger and more effective protections for older investors in our frequent meetings with federal and state legislators, both on Capitol Hill and in their home districts.
Our industry is built on the relationships between independent advisers and their clients — relationships that often span decades and cross generations. Our members are driven not just by a desire to help their clients achieve their financial goals, but by deep and sincere concern for their long-term well-being. We look forward to working with regulators and legislators at both the state and federal level to shape the policies that will protect elderly clients during the most vulnerable stage of their adult lives.
Dale E. Brown is president and chief executive of the Financial Services Institute Inc.