This week we celebrate National Senior Citizens Day, a day to show our great appreciation for the wisdom and experience that seniors bring to our families and communities, but also one we must reaffirm our responsibility to help seniors protect their financial future.
A recent survey the North American Securities Administrators Association conducted of our members — the local securities “cops on the beat” fighting against financial fraud — has confirmed that financial exploitation against seniors remains a top problem. Four in five of the regulators who responded to our survey identified the Silent Generation (age 70 and older) as most vulnerable to financial fraud.
Senior citizens’ finances represent a lifetime of hard work and planning ahead. Taking care of seniors means we must also take care to protect the life savings on which they depend. Our survey also found that almost every one of the regulators who responded (97%) believes that the majority of senior financial fraud cases are only detected once they have caused serious problems.
We, however, cannot be content to punish those who scam seniors, we must be committed to catching them before they get the chance to prey on our most vulnerable citizens. As the regulators closest to the investing public, we can step in quickly to help. But our ability to help declines when we are alerted too late after the fraud has occurred or the money is gone.
While most survey respondents (97%) feel awareness of the danger for senior financial fraud has increased over the past year, few feel the problem is actually decreasing and 3 in 10 (29%) even say that cases of such fraud are on the rise. Awareness alone is clearly not enough. Vigilance from all those who support seniors and help them navigate the financial questions of their golden years — family, advisors, industry, caregivers and regulators — must also be met with concrete action and tools that help prevent fraud.
Legislation is one such tool that can be deployed to great effect. NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation can help ensure senior financial fraud is reported to authorities and in some instances stopped before significant harm occurs. Three-quarters of regulators in states with such laws say it has allowed the disbursements of funds to be stopped by financial services firms such as broker-dealers before being directed to fraudsters.
As regulators and law enforcement seek more tools to stop suspicious and fraudulent transactions, industry also has a larger role to play. Regulators believe, by a three-to-one ratio, that broker-dealers and investment advisers can do more to help prevent senior fraud. Another recent survey released by NASAA in June offers insight into what actions are being taken in the industry.
The June study, which asked about the practices of more than 60 broker-dealer firms throughout the United States, showed there are some simple steps firms can take in developing a better threat response protocol. For example, over half (54%) of the responding firms have not developed a formal policy defining senior customers and less than half (41%) had a form for customers to identify a trusted emergency contact. As financial firms reflect on National Senior Citizens Day, they should give their customers the gift of enhancing all protections for the savings and investments that seniors rely on in planning for the rest of their lives.
Indeed, we all can recognize a great need to help our seniors. State and provincial securities regulators throughout North America are here to help, and we strongly encourage everyone to early detect and report suspected investment exploitation and fraud so that we can do our our best to stop it before it happens.