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Progress being made to help advisers combat elder abuse

Group has established a resource center on state laws and agencies to help vulnerable clients

Mar 1, 2016 @ 12:15 pm

By Dale Brown

For many years, the Financial Services Institute has been keenly focused on working with our members, regulators and legislators to develop solutions to the persistent and heartbreaking problem of elder financial abuse.

This challenge becomes more urgent every day, as more retirees reach a stage in life where strong financial safeguards and the close attention of caring, ethical professionals become even more vital to ensuring their long-term well-being.

The problem is more widespread than many realize: According to a 2010 Investor Protection Trust survey, one out of every five U.S. citizens over the age of 65 has already been victimized by fraudulent financial schemes or other forms of abuse.

In working to combat this problem, the key question for advisers and financial services firms has never been their desire to help; our members' commitment to protecting senior investors has been wholehearted and consistent. Rather, it has been a simple question of direction: “What can I do?”

In our ongoing dialogue on this issue with members, several hurdles emerge consistently. Many have questions on the proper channels and processes for reporting possible abuse, which vary from state to state. The issue of potential liability for disclosing sensitive client information to other institutions or third parties is another key concern. Advisers also frequently mention the desire for ongoing training or tips to help them recognize the signs of abuse, which can be obvious in some cases, and more subtle and pernicious in others.

To help answer these concerns, FSI launched our Elder Abuse Resource Center (www.financialservices.org/elderabuse) in 2014 to provide advisers and other concerned professionals with a centralized, one-stop point of reference on the appropriate state and federal agencies to contact in cases of possible abuse. The resource center also contains information about reporting restrictions in each state, key signs to look for that may indicate financial abuse, and a wealth of other material to help advisers protect their most vulnerable clients.

FSI has also been very pleased to play a role in the development of the model statute recently adopted by the North American Securities Administrators Association to fight fraudulent and predatory behavior that targets our valued seniors. The model, called “An Act to Protect Vulnerable Adults from Financial Exploitation,” goes a long way toward responding to our members' concerns by providing state lawmakers and regulators with a strong framework for developing their own bills to fight elder abuse.

FSI was honored to be invited to participate on the advisory council to NASAA's Committee on Senior Issues and Diminished Capacity. FSI acted as a valuable source of insight and perspective to the committee throughout the process.

The model statute encourages states to adopt regulation or legislation that would:

• Empower financial advisers and broker-dealers to place a temporary hold on disbursements to clients in cases where elder financial abuse is suspected, giving them time to investigate – in conjunction with state securities regulators and adult protective services – and determine whether fraud or exploitation may be occurring;

• Mandate that advisers report suspected cases of elder exploitation to the state securities regulator and state adult protective services agency;

• Provide immunity from administrative or civil liability for broker-dealers and investment advisers for taking actions permitted under the act, including delaying disbursements;

• Authorize notification to previously designated third parties regarding suspected abuse; and

• Allow qualified individuals such as financial advisers to provide government authorities records that are relevant to the suspected or attempted financial exploitation.

Although it can be difficult to predict when individual states will implement laws of their own based on NASAA's framework, the adoption of the model statute signals significant momentum in the effort to give both advisers and regulators the tools they need to protect vulnerable senior investors.

FSI members are determined to do all we can to train, empower and support advisers and other financial professionals, as the first line of defense against this threat. We are also very pleased with the productive ongoing dialogue we have developed with regulators and legislators on this issue, and with the positive progress we have seen so far in establishing a regulatory framework that will help advisers and other professionals detect and prevent exploitation of our treasured seniors.

The problem of elder financial abuse is too big for any one group to tackle alone. By working alongside regulators and our members to focus on this crucial common goal, however, it is clear that the effort to protect our nation's seniors from financial exploitation is gaining much-needed momentum.

Dale Brown is president and CEO of the Financial Service Institute Inc.

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