Elder Financial Abuse: Best Practices to Keep Your Clients Protected

Elder financial abuse is on the rise, and will likely increase as the Boomer generation continues to age. Investors over the age of 50 control 70% of the nation’s wealth, making them ripe for recruiting as clients, and unfortunately, targets. As the number of elder abuse claims grows, the SEC has increased its scrutiny of firms providing questionable or inappropriate recommendations to senior investors. The result: firms must evaluate the risk of elder financial abuse to both their clients, and to the firms.

What You Should Do:

One of the best ways firms can protect themselves and their senior clients is to assess and improve best practices, and determine suitability of recommendations.

When considering best practices, educating employees and clients is a crucial component to preventing elder financial abuse. Employees should be trained to:

  • Recognize the investment needs of senior investors,
  • Recognize red flags of elder financial abuse,
  • Report suspected activity, and
  • Know and understand state specific requirements.

Getting to know your elderly clients and their unique needs will also help minimize the likelihood of victimization. Employees should ask questions about their clients’:

  • Time horizon
  • Net worth
  • Liquidity needs (Upcoming expenses such as a grandchild’s college tuition or a known illness?)
  • Plans for estate (Is a will or trust already in place? Do they have Power of Attorney?)
  • Special needs
  • Agreement to a third party taking part in discussions before, and in case debilitating issues arise.

Employees should also be trained to recognize and respond to red flags of elder financial abuse, such as changes in transaction behaviors or personal behaviors, or excessive caregiver interest in financial matters. Employees should also be trained to report suspected activity and establish safe guards to minimize suspected abuse activities.

Occasionally, senior investors require more frequent and enhanced contact, such as reminders, follow-up letters summarizing discussions, different font and color choices, and extra time to make investment decisions. Elderly clients should also be informed of scams, frauds, resources available to them, and the state-specific limits and requirements for their investment strategy.

Suitability:

Not all products are appropriate for senior investors. Long-term investments such as 30-year bonds or annuities don’t always make sense for seniors. For the same reason, riskier investments will have less time available to recover should the investment decrease in value.

How Oyster Can Help:

Oyster Consulting is ready to assist in evaluating your firm’s policies and procedures. We can also recommend best practices and customized training. Contact us if you have questions or would like to speak to one of our experts on this topic.

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