State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors

Jan 18, 2018 @ 4:12 pm

By Greg Iacurci

States are increasingly wading into the fight to combat elder financial abuse, the top state securities regulator said Thursday.

The North American Securities Administrators Association released a model rule two years ago that mandates that advisers report suspected abuse to certain state authorities, allows them to stop disbursements from seniors' accounts and gives them protection from liability.

To date, 13 states have passed a version of the model act, and roughly 10 more states are expected to follow suit this year, said Joseph Borg, NASAA's president and the securities commissioner in Alabama.

"We know it's going to be introduced in a number of state legislatures," Mr. Borg said at an event in New York focused on financial wellness and aging. AARP, Bank of America Merrill Lynch, the New York Academy of Medicine and the Global Coalition on Aging sponsored the event.

Some states may be waiting to see what happens at the federal level before taking action, Mr. Borg said. Legislation similar to NASAA's model rule is currently working its way through Congress. If there's no further congressional action this year on that bill, the Senior Safe Act, some states may feel compelled to take up NASAA's rule, Mr. Borg said.

The Financial Industry Regulatory Authority Inc. has a similar rule going into effect next month. The NASAA model act requires mandatory reporting by advisers, whereas the federal legislation and the Finra rule are voluntary.

Such policy decisions come amid increasing recognition that fraud targeting seniors is a widespread problem that financial institutions such as broker-dealers and advisory firms can help prevent.

"It's a universal, global problem," said Tina Gabriel, director of financial crime investigations at People's United Bank.

Seniors lose billions of dollars in aggregate each year as a result of such financial exploitation, though the full scope of elder financial abuse isn't yet clear because of a dearth of reported data, panelists said.

"This is a developing issue. This is all new," Mr. Borg said.

Jason Karlawish, a professor of medicine, medical ethics and health policy at the University of Pennsylvania, said firms need to change to address potential problems posed by aging and cognitive impairment, which puts clients more at risk of being exploited.

For example, a client whose financial literacy has clearly deteriorated — a telltale sign of cognitive decline — may need a different adviser who's trained to handle such issues and communicate with a client in an appropriate way, he said.

"It's a business opportunity, quite frankly," Mr. Karlawish said. "I think you see some coin here," he added, referring to financial institutions.

(More: Legislation to combat elder financial abuse advances in the Senate)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

What is causing the fever for RIA deals?

Deputy editor Bob Hordt and senior columnist Jeff Benjamin discuss factors adding fuel to the M&A fire in the independent advice space.

Latest news & opinion

Merger mania: Why consolidation in the RIA space is about to explode

The pace is expected to pick up as big firms seek to get even bigger and older advisers look to cash out.

Voya Financial Advisors exposes more sensitive adviser information on its website

List of top advisers at the firm comes after Social Security numbers were put at risk.

Securities America hit with lawsuit seeking $18 million in damages

Firm is dealing with the fallout from a rogue broker it fired a year ago.

Brian Block continues his legal fight to stay out of prison

A judge denied Mr. Block's motion for a new trial, but he wants another day in court.

10 social media stars you're not following yet, but should be

Some of the great people using social media to discuss wealth management and financial advice who might not be on your radar.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print