Charleston — The IRI Annual Meeting — and, no doubt, other conferences within this industry — had a heavy focus not only on the importance of retirement planning and the proposed DOL fiduciary standard, but also on elder financial fraud.
With the U.S. population aging at a rate never before seen, cases of elder financial fraud are skyrocketing. To speak on the subject, a panel of industry figures assembled at the IRI Annual Meeting, including:
Thomas M. Mierswa, Jr. Esq., executive director, branch advisory group and compliance division, Morgan Stanley Wealth Management (moderator)
Jamie Cox, managing partner, Harris Financial Group (panelist)
Wendy Johnson, assistant vice president, conflict resolution, department of compliance, U.S. Bancorp Investments (panelist)
Below is an excerpt of what was discussed:
Thomas Mierswa: We see it all too often: someone who is being financially exploited who is suffering from diminished capacity.
Jamie Cox: A lot of it’s left up to us; it’s up to us to know our clients. As an on-the-ground person, it’s very difficult to understand what to do [in situations like that]. Who do you call? Does the situation rise to the level of financial exploitation or elder abuse? From us, we really need training and advice from our legal and compliance folks. We have 10,000 people turning 65 every day in this country. The volume of clients we deal with makes it difficult to know every detail of each one.
What Your Peers Are Reading
Wendi Johnson: Any time a rep has a concern, we don’t ask them to make end decisions. We look at it — look at their client’s accounts and trading and banking activity. We also work closely with our corporate security division if we have concerns about what’s happening in other firms [the client does business with]. We can work with Adult Protective Services or law enforcement if there’s any merit as to what’s being brought to us. We try to bring the families in as well.
Mierswa: We find it helps to have a common set of rules. FINRA and other states are looking into this. One of the biggest concerns we have is the “lone ranger” scenario, where an experienced rep thinks they can handle it themselves and tries to. It could bring many ramifications — a lot of legal liability. Washington state, Missouri and Delaware have passed laws against elder abuse.
Cox: A lot of reps are very territorial and sometimes they’re afraid they’ll lose accounts if they bring something up regarding elder fraud. You have to first get the reps to recognize their responsiblity to the client. As the population ages, reps need to get prepared, starting today.
Mierswa: It’s an extension of doing what’s right for the client. It’s the need to educate the advisor population. How does U.S. Bancorp do that?
Johnson: We go out to the field. I do a lot of calls and training and I think it’s important to foster that collaborative relationship. Historically, compliance is not the favorite of the field. But we want to let them know we’re partnering with them. We understand that a lot of what we do [as compliance] does not generate revenue, but it needs to be done.
We never have a rep make a call to authorities. I do that. The rep should focus on their relationship with the client and that’s why I handle the call. I’m looking to protect the client and protect the rep’s business and career. That alleviates the anxiety the rep may have.