Many state legislatures in the U.S. have recently passed legislation mandating that investment adviser firms and their supervised persons report instances of elder abuse by third parties to the applicable authority in the state (e.g., adult protective service, attorney general’s office). Moreover, many securities regulators have passed specific rules requiring mandatory reporting of elder abuse and/or taken the position that reporting instances of elder abuse is essentially part of an investment adviser firm’s fiduciary duty to act in a client’s best interest.
Since this mandatory reporting of possible elder abuse has gone into effect, several investment adviser firms have shared with us that after reporting possible instances of clients being subject to elder abuse by third parties, nothing appears to happen. Although there are obviously confidentiality protections that prevent the state’s adult protective services agency from sharing its investigative findings with an investment adviser firm, there are also limited resources available to these state agencies which may cause them to only investigate elder abuse reports where diminished capacity or vulnerability is clearly alleged.
During a complimentary webinar sponsored by RIA Compliance Consultants, Inc. on Wednesday, January 22, 2020 at 12:00 p.m. Central Daylight Time, Bryan Hill, President of RIA Compliance Consultants, will be interviewing Claire McHenry, Deputy Director of the Nebraska Securities Bureau, and Toni Bonsera, Program Specialist with the Nebraska Department of Health and Human Services where she focuses on safety of vulnerable adults, about how an investment adviser can more effectively report elder abuse and better protect its vulnerable clients. Learn from the experts about signs of diminished capacity and what facts and individuals are critical to making the most effective report of elder abuse to the state’s adult protective services. You may sign-up for this free webinar by registering at https://register.gotowebinar.com/register/704005604733767947 .
Additionally, RIA Compliance Consultants has prepared the “Senior/Vulnerable Clients – Compliance Package” to assist firms in identifying and reporting abuse of senior and vulnerable clients. The documents included in the package are listed below. To see a description of the document, click on the title and follow the link.
- Senior/Vulnerable Clients – Training (PowerPoint)
- Senior/Vulnerable Clients – Training Quiz
- WSP/CoE Section Update – Protecting Older and Vulnerable Clients with Diminished Capacity
- Senior/Vulnerable Clients – Client Authorization to Communicate with Trusted Emergency Contact
- Senior/Vulnerable Clients – State Reporting Requirements
- Senior/Vulnerable Clients – Internal Reporting Form for Exploitation
Finally, when reviewing its policies and procedures related to abuse of vulnerable clients, an investment adviser firm should also consider whether it has adequate policies and procedures to identify investment adviser representatives who have diminished capacity and mitigate such risks. RIA Compliance Consultants has prepared a checklist, Rep – Diminished Capacity of IAR (also referred to as Senior/Vulnerable Clients – Diminished Capacity of IAR), which assists in identifying some of the issues and best practices that an investment adviser firm should consider with respect to an investment adviser representative who may have diminished capacity or cognitive impairment. This item can be purchased here.
If you have questions regarding these or any of the other services offered by RIA Compliance Consultants, please contact us at 877-345-4034 extension 115.