Thursday, April 6, 2017
We all know that financial exploitation is a serious and significant problem in the U.S. I was interested in this article from Investment News detailing efforts that the financial services industry and others are taking to help their elder clients protect themselves from financial exploitation. Advisers taking steps to protect elderly explains although "[t]here's widespread acceptance in the financial services industry that elderly financial abuse is a growing problem, but there's no universally accepted game plan for how to respond... Many times firms' internal procedures will involve adviser education and training, and gathering third-party contact information for accounts." The article highlights the efforts of Wells Fargo Advisors which the article explains: "Wells Fargo launched an 11-member team more than two years ago within its compliance department that serves as an internal clearinghouse and case manager when advisers see a potential problem with a client. ... The unit has taken about 4,000 reports from the field, about half of which were incidences of abuse. Wells' Elder Care Initiatives often involves state adult protective services or securities regulators in the matters.:
Bank of America Merrill Lynch has also launched efforts to help protect their elder clients, according to the article. For example, one step Merrill Lynch has taken is to have "created a contact authorization form that gives advisers a trusted person to reach out to in case of suspected fraud or to obtain more information about behavioral changes linked to possible exploitation."
The article also highlights the efforts of Morgan Stanley, Charles Schwab, Edward Jones, and Fidelity Investments. As for smaller firms, they aren't lagging behind. For example, "[s]maller firms also are responding to the elder-abuse threat. For more than a year, Romano Wealth Management has had in place steps that its nine advisers follow in reporting potential abuse to the compliance officer, who then decides whether to involve adult protective services or regulators."
The article also discusses the efforts at the federal level. "The industry is starting to get protection from regulators. In February, the Securities and Exchange Commission approved a Financial Industry Regulatory Authority Inc. rule designed to curb elder abuse. It requires brokers to make “reasonable efforts” to identify a “trusted contact” for investment accounts. It also permits them to prevent the disbursement of funds from the account and to notify the contact if the broker suspects the client is an abuse victim." The article also mentions several states that have passed laws that require investment advisors to notify APS as well as state regulators if financial exploitation is suspected.
The article discusses some other efforts and provides a good picture of various efforts taking place both by legislation and industry efforts.