It was the horror stories that got our attention first. There was the Ohio planner who converted more than $924,750 from a 95-year-old customers trust account without the customers knowledge or authorization, according to FINRA. And there was the Nebraska advisor who exercised discretion in the account of an elderly customer with dementia to recommend transactions that were qualitatively and quantitatively unsuitable, FINRA found.
Still more: The Washington state advisor who, the SEC noted, defied a FINRA ban and continued to work with clients, many of them elderly; he was eventually convicted of stealing more than $255,000 from 26 online accounts of clients. Many of the victims were elderly and had little understanding of online brokerage accounts, the SEC noted at the time.
Of course, we werent the only ones paying attention. FINRA, for instance, cited concern about the treatment of senior investors in laying out its examination priorities for this year. State regulators are creating new protections, as well.
The scope of elder financial abuse remains difficult to quantify, in part because it can be so intimate; its often committed by caregivers, family members or other people with emotional ties to the victim. One recent study, cited in our cover story, estimated that just one of every 43.9 incidents of elder financial abuse are reported to social services or law enforcement.
Against that backdrop, financial advisors have a role and, in some states, a legal obligation to help keep their clients safe. For each of your older clients, spell out in writing who you should turn to if the client shows signs of diminished capacity. Watch for red flags: a client making out-of-character requests for cash, or suggesting investments inconsistent with previously determined goals. Be certain you know your states laws about what behavior can (or must) be reported, and what options you may have to stall a questionable transaction.
Ive always said that, as a journalist, the best industries to cover are the ones that are in flux by that yardstick, financial advice has been a dream. For almost three years (the first two as executive editor, then as editor-in-chief), Ive been fortunate to immerse myself in an industry getting buffeted by demographic shifts, regulatory uncertainty, technology evolutions and changing consumer preferences.
This is my final issue with Financial Planning, and I owe a debt of thanks to the hundreds of advisors, consultants and other industry players who took the time to talk to us, contribute their expertise, speak at our events and help me understand the industrys many complexities and subtleties. This is where I get off, but I hope you all continue to enjoy the ride.
- Advisors Fret Over Client Savings
- Elder Financial Abuse: Regulators' Red Flags
- Retirement Planning: Can We Do Better for Clients?