Close
ThinkAdvisor

Regulation and Compliance > State Regulation > NASAA

Combating Elder Abuse Requires More Than Raising Awareness

X
Your article was successfully shared with the contacts you provided.

You don’t need to be an expert in demographics to recognize that the aging of North America is upon us.

According to the most recent U.S. Census report, the senior population (those over 65) represents the fastest growth rate of any age group. The second fastest age group? That would be the rest of the Baby Boomers, those between 50 and 64 years old.

In the wake of World Elder Abuse Awareness Day on June 15, state and provincial securities regulators are paying special attention to the changing needs of aging investors throughout North America. Whether faced with issues related to diminished capacity or outright fraud, seniors are increasingly becoming potential victims of the crime of the 21st Century: senior financial exploitation.

As regulators we see first-hand how the damaging results of this exploitation: the loss of a life’s savings, decreased independence, and shattered trust.

Senior financial exploitation is an often unrecognized and underreported form of elder abuse and is growing due both to the amount of wealth seniors have accumulated throughout their careers and the steadily rising number of retirees. Elders remain a top target of investment fraud with one-third of enforcement actions taken by NASAA members involving senior investors.

That’s one reason why NASAA and its members launched a collaborative effort in 2003 to shine a light on this emerging problem and why we renewed that effort last summer with the creation of a Board-level Committee on Senior Issues and Diminished Capacity.

Led by Chair Lynne Egan, Montana’s Deputy Securities Commissioner, and Vice-Chair Patricia Struck, Wisconsin’s Securities Administrator, the committee’s work is informed by input from an Advisory Council of industry, academic and policy experts.

I’d like to take this opportunity to provide a quick update on the work underway in each of the committee’s three working groups.

The Model Legislation Working Group is drafting model legislation addressing issues faced by firms when senior and diminished capacity issues arise. To guide its work, the group is reviewing existing state legislation. In my home state of Washington, for example, the Abuse of Vulnerable Adults Act (RCW 74.34) allows financial services professionals to report to state or local authorities their concerns if they believe a vulnerable adult is being or has been abandoned, abused, financially exploited or neglected.

It also allows record sharing with the Washington Department of Human Services, law enforcement and prosecutors when there are such concerns; freezes assets of suspected exploiters or victims; requires training on elder and vulnerable adult financial exploitation for employees of financial institutions; and allows financial firms and employees to avoid civil liability when acting in good faith.

The committee’s Best Practices Working Group is meeting with securities and other industry groups to help identify existing best practices for broker-dealer and investment advisor firms to prevent and detect the exploitation of seniors and individuals with diminished capacity. Among the group’s areas of interest are practices involving the use of power of attorney forms, financial directives being put in place by an account holder when an account is opened, and ways to identify suspicious or unusual patterns of activity in senior accounts.

Finally, through the Outreach Working Group NASAA is developing the ServeOurSeniors program, which will include a resource-rich website for seniors, caregivers, regulators and securities industry professionals, a training program for securities regulators on issues related to diminished capacity, and an outreach program to provide much-needed help for front-line financial workers to better detect the red flags of elder financial exploitation and to learn where to report their suspicions of fraud.

We look forward to the rollout of our new ServeOurSeniors website at the 2015 NASAA Annual Conference, September 27-29 in San Juan, Puerto Rico.

The committee’s work is a truly collaborative effort and we are pleased by the willingness of industry representatives, academic experts and others to share their expertise with us as we jointly address the wide range of challenges facing senior investors. This issue will remain a top priority for NASAA not only on World Elder Abuse Awareness Day, but throughout the year.