Fraud against the senior population is an unfortunate reality, but there are ways financial advisors can help prevent this type of crime. Denver firms First Financial Equity Corporation
and the Investments & Wealth Institute
hosted a unique seminar this past fall. The seminar’s featured speakers were attorneys from the Colorado Attorney General’s Office and the Denver District Attorney’s Office. The afternoon focused on how financial advisors can help their clients and other seniors protect themselves from fraud. The seminar also explored how advisors can help local law enforcement if their clients become victims of fraud, including helpful tips on how to spot and report these crimes to local law enforcement.
“Elder abuse and exploitation are important topics in general, especially within the investment and wealth management industry,
said Sean Walters, CAE®, Chief Executive Officer, Investments & Wealth Institute. Adding “those within the industry are uniquely equipped to recognize financial abuse.”
Guest Speakers included Alison Connaughty, Colorado Assistant Attorney General and Jane Walsh, Senior Deputy District Attorney, Director of At-Risk Protection.
“Seventy-five percent of abuse cases are perpetrated by a trusted individual, be it a family member or close friend,”
said Jane Walsh, DDA. “It is really important for financial advisors to ask questions and be vigilant for their clients’ wellbeing.
Financial advisors are often among the first to spot red flags indicating abuse and exploitation. “Our clients trust us to help them navigate and plan their financial future,”
said Robert Spicer, Executive Vice President, First Financial Equity Corporation. Adding, “advisors have often worked with clients for years helping to build their wealth; we know their goals and risk tolerance, and often we know a lot about their families. Knowing the warning signs is important for everyone, but especially advisors who can step in and provide resources when elder abuse is identified.”
Colorado made it mandatory for financial advisors to report any suspected financial exploitation of the elderly in 2014 with the introduction of Mandatory Reporting laws for professionals working with seniors over the age of 70. In 2016, those laws were expanded to include professionals and others working with intellectually and developmentally delayed adults. These changes make a report to law enforcement essential within 24 hours. “The risk factors are higher with elderly individuals for a number of reasons, coupled with the fact that the tactics of reaching victims are becoming increasingly sophisticated,”
said Allison Connaughty. “If you suspect fraud, the best thing to do is make a report through www.StopFraudColorado.gov, the information reports provide contribute to potential investigations and possible legal action.”
Advisers and wealth management professionals don’t need hard proof to make a report, there is also no minimum amount of damages that need to be incurred in order to report. “Our investigators and auditors will determine if fraud is being committed,
added Connaughty. “The sooner a report is made the sooner we can investigate and stop the fraud.”
Financial elder abuse and exploitation costs seniors and their families billions of dollars. How many billions has been the subject of industry debate. A 2011, a study by MetLife Mature Market Institute found the sum to be $2.9 billion, however even that large sum is considered conservative. A more recent 2015 Trulink Financial study
estimates financial elder abuse costs families over $36 billion each year. Either way, it is a lot of money and experts agree, both sums are probably far lower than the actual amount as it is so under reported; the Federal Trade Commission
has estimated that the only 1 in 24 financial elder abuse crimes ever get reported.
Recent regulatory efforts have given advisors some additional latitude to protect their clients. In February 2018, Financial Industry Regulatory Authority (FINRA) made two rule changes that help advisors address financial exploitation of seniors and vulnerable adults. These changes require firms to make an effort to obtain contact information for a trusted contact person for a customer’s account. In addition, firms can place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify the trusted contact of the temporary hold. FINRA also enacted the first uniform, national standards to protect senior investors.
At one point during the seminar, an advisor asked if reporting once is enough, “Keep making reports as you have more information,”
responded Walsh. “Multiple reports assist us in identifying and flagging patterns in addition to possibly helping build our investigations.”
Elder financial abuse is a terrible reality, but one that advisors and other professionals can help thwart. By knowing the warning signs and the resources available you can assist in making elder abuse less of a reality for your clients.
Here are some helpful resources to fight elder abuse: