The Ontario Securities Commission recently published research findings focused on improving investment advisory client participation in designating a trusted emergency contact (referred to in the report as a “trusted contact person” or “TCP”). Although designating a trusted emergency contact is an important tool for investment advisers to protect a senior or vulnerable client’s investments against financial exploitation or losses due to diminished capacity, many clients decline to do so. This new report aims to help investment advisers and broker dealers utilize behavioral science to encourage its senior and vulnerable clients to name a trusted emergency contact. Despite having an intended audience in Canada, the report highlights a number of useful insights and strategies that can be implemented by investment advisers across the United States. To read the full report, click here.
On May 18, 2021, South Carolina enacted new legislation intended to help investment advisers and broker-dealers protect clients who are vulnerable adults (such as seniors with diminished capacity) from financial exploitation. Similar to financial exploitation laws adopted by other states, South Carolina’s new law permits state registered investment advisers and broker-dealers to delay disbursements and transactions under specified, limited circumstances for a vulnerable client who is an “eligible adult” as defined by the statute. In addition, a registered investment adviser firm may contact other third parties previously designated by the vulnerable client, such as a trusted emergency contact, regarding the suspected financial exploitation. Firms are also permitted to report suspected financial exploitation to South Carolina’s Adult Protective Services and Securities Division on a voluntary basis. In the event that an investment adviser firm delays a transaction or disbursement, reporting to the specified agencies is mandatory. Click here to read South Carolina’s new financial exploitation law.
Nebraska Enacts Law Giving Investment Advisers Ability to Protect Seniors and Vulnerable Adults from Financial Exploitation
April 10, 2021
The North American Securities Administrators Association, Inc. (“NASAA”) recently released a white paper detailing the results of a study conducted by its Senior Issues/Diminished Capacity Committee. While many investment adviser firms are increasingly aware of issues related to diminished capacity in clients, NASAA has found that not all registered investment advisers are prepared to identify and address diminished capacity among investment adviser representatives. As part of the study, NASAA surveyed a number of financial institutions and industry professionals including Bryan Hill, President of RIA Compliance Consultants, Inc.
September 20, 2010
On June 10, 2010, the State of Washington passed new legislation designed to prevent the financial exploitation of vulnerable adults. The new legislation provides financial institutions the power to refuse to conduct a transaction if the institution suspects abuse and also requires employees of investment advisers and broker dealers to undergo abuse identification training. Section 20(16) of Chapter 74.34 of the Revised Code of Washington defines “vulnerable adult” as “a person: