A COVID Vaccination Isn’t the Only Way to Help Seniors and Provide Immunity for Employees

If Willie Sutton were alive today, he might be targeting seniors instead of robbing banks.

Why? Because that’s where the money is.

An ongoing and rapid increase in the size of the nation’s 65-and-over population and the disproportionate wealth among older generations have combined to create a petri dish for financial fraud. Data from the U.S. Census Bureau shows the nation’s 65-and-older grew 34% over the last decade and by 3.2 from 2018 to 2019. Partly because of a long-term investment time horizon, that same age group has the highest median and average net worth.

Regulators have responded with a new resource intended to help protect senior investors and establish immunity for individuals and firms that implement the training requirements of the Senior Safe Act (SSA).

The North American Securities Administrators Association (NASAA), the U.S. Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA) have created a training program that can be used by firms to train associated persons on how to detect, prevent, and report financial exploitation of senior and vulnerable adult investors.

The training presentation can be accessed on FINRA’s website here.


How Advisors Can Benefit

The SSA became law in 2018. It addresses barriers financial professionals face in reporting suspected senior financial exploitation or abuse to authorities. Specifically, the Act protects “covered financial institutions” – which include investment advisers, broker-dealers, and transfer agents – and their eligible employees, affiliated persons, and associated persons, from liability in any civil or administrative proceeding for reporting a case of potential exploitation of a senior citizen to a covered agency.

Firms and individuals must meet a two-step test to receive immunity under the SSA. First, employees are required to undergo training on how to identify and report exploitative activity against seniors before making a report. In addition, reports of suspected exploitation must be made to a state or federal regulatory agency “in good faith” and “with reasonable care.” While the SSA incentivizes reporting, it does not mandate any action to be taken.


Warning Signals of Potential Financial Exploitation

The SSA defines exploitation as the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or a fiduciary who uses the resources of a senior citizen for monetary or personal benefit, profit, or gain; or results in depriving a senior citizen of rightful access to or use of benefits, resources, belongings, or assets.

The training program provided by regulators lists these common telltale signs:

  • Uncharacteristic and repeated cash withdrawals or wire transfers.
  • Appearing with new and unknown associates, friends, or relatives.
  • Uncharacteristic nervousness or anxiety when visiting the office or conducting telephonic transactions.
  • Lacking knowledge about his, her, or their financial status.
  • Having difficulty speaking directly with the client or customer without interference by others.
  • Unexplained or unusual excitement about an unexplained or “too good to be true” windfall; reluctance to discuss details.
  • Sudden changes to financial documents such as powers of attorney, account beneficiaries, wills, or trusts.
  • Large, atypical withdrawals or closing of accounts without regard to penalties.
  • Frequent password reset requests or new online account access requests.


Reporting Requirements

If you suspect a senior client has been targeted or victimized by financial exploitation, the first step is to follow your firm’s policies and procedures. They may require that employees escalate their concerns to their supervisor or directly to your firm’s compliance department at their earliest opportunity.

Internal policies and procedures may require that you discuss the concerns directly with your client. If the client in question has the name of a trusted contact person on file, notifying that individual could be a logical next step, depending on the circumstances. Each situation is unique. A related best practice is to learn which of your clients has not provided your firm with the name of a trusted contact person and fill in that blank before a problem arises.

It’s not necessary to have iron-clad proof that financial exploitation exists. A reasonable belief of financial exploitation is sufficient, and no dollar amount is too small to report.

Our specialized team at Core Compliance & Legal Services, Inc., understands the complexities of detecting and reporting financial fraud perpetrated against seniors. If you have a suspicion, please don’t wait to protect your client and your firm. We can help. Please contact us at (619) 278-0020 or visit us online at corecls.com


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