June 15 is World Elder Abuse Awareness Day (WEAAD). WEAAD was launched by the International Network for the Prevention of Elder Abuse and the World Health Organization at the United Nations. The purpose of WEAAD is to provide an opportunity for communities around the world to promote a better understanding of abuse and neglect of older persons by raising awareness of the cultural, social, economic and demographic processes affecting elder abuse and neglect.
Investment advisers have a duty to do what they can to protect senior investors. In 2018, the United States Congress passed and the President signed the Senior Safe Act. The Senior Safe Act (referred to as “the Act,” formerly H.R. 3758) encourages financial services firms to train employees to spot elder abuse, while granting limited immunity to individuals at financial institutions who report such abuse to law enforcement or regulators in accordance with the Act.
Many state legislatures have 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 state 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.
So, what can your investment adviser firm do to serve older or vulnerable clients? RIA Compliance Consultants recommends that an investment adviser firm consider the following:
- Adopt policies and procedures designed to address issues that may arise when assisting elderly clients
- Address how your investment adviser firm monitors and meets the changing needs of clients as they approach retirement age
- Adopt policies and procedures designed to handle situations in which a client exhibits diminished capacity or financial competence
- Provide regular training to all staff, including back office personnel, on recognizing and preventing financial abuse of the elderly and other vulnerable clients.
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
The “Senior/Vulnerable Clients – Compliance Package” is available here. Additionally, any of these documents can be purchased a la carte here. We are offering all of these forms at a discount of 35% when you use the promo code SENIORS at checkout until Wednesday, June 17, 2020.
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 respond to this newsletter or click here to schedule an introductory phone call.