We must protect our most vulnerable from financial fraudsters
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It’s no small feat to reach retirement age with a hard-earned, carefully-invested nest egg built up over a lifetime of work. It’s no small loss to learn you’ve been a victim of fraud, and the financial security you planned for has been jeopardized. That’s why it’s no small task to ensure we have a vigilant financial community that proactively protects our seniors and their savings.

Data collected from more than 60 broker-dealers shows that in 2015 alone, nearly 2,300 cases concerning possible financial abuse or exploitation of seniors were reported to outside authorities. This number represents data from only a fraction of the more than 3,800 securities firms in the United States, but it speaks to a problem that is widespread. Seniors, who have been saving and investing throughout their lives for their families and for their own retirement, are frequent targets of financial fraud and investment schemes. 


The findings come from a new study on broker-dealer senior practices by the North American Securities Administrators Association (NASAA). The study reveals the extent to which con artists and swindlers target seniors, the challenges brokers face in identifying and preventing financial fraud and exploitation, and the various standards of safety in place in the industry. 


The NASAA study shows that among seniors, a disproportionate number of cases reported by firms involve 81-to-90-year-old clients, suggesting scammers go after the oldest and most vulnerable people in our communities. 

The cases discussed by respondents offer some eye-opening examples about the very different permutations of this common threat. One survey respondent spoke of an elderly client while on a church ministry trip who was nearly convinced to make a convicted murderer a beneficiary to her million-dollar account. In another case, a client nearly forfeited $200,000 to a $4.5-million sweepstake scam.

However, only 30 percent of firms responding to the survey said that they had policies specifically tailored to seniors, and less than half even had a formal definition of “senior.” Overall, a troublingly high number of brokers lack key tools for protecting seniors — emergency contact forms, resources to support elderly clients and decision-makers responsible for notifying outside authorities about cases of possible abuse. Moreover, while firms report 62 percent of suspicious cases to adult protective services, they rarely contact state securities regulators (less than 1 percent). 

The silver lining is that brokers are increasingly interested in addressing elderly abuse. According to the new report, 95 percent of the firms included in the survey provide some degree of training on senior issues, and 94 percent have a procedure for internally reporting the potential exploitation of vulnerable clients.

The challenge for many firms seems to be putting all the pieces together. For instance, roughly half of the firms that formally define seniors still lack a team to deal with seniors’ affairs. Meanwhile, roughly half of the firms with such a team lack a formal definition of senior.

Fortunately, a few simple policies can make a massive impact. Brokers should both adopt clear definitions of who constitutes a “senior” or “vulnerable adult,” and assign and train employees to deal with seniors’ affairs once those definitions are in place.

Brokers should also update the accounts of elderly clients more frequently and undertake suitability reviews when seniors have dramatic changes in their account activity. These measures, combined with procedures for reporting suspicious cases to outside authorities, will help thwart fraud and exploitation.

State securities regulators continue to be the local cops on the beat and the community resource for fighting financial fraud. This World Elder Abuse Awareness Day, many of our members across the country are offering free training to financial professionals to increase identification and reporting of suspected cases of elder financial fraud or exploitation.

Of course, Congress and lawmakers have a role to play in protecting our citizens as well. Legislation like the Senior$afe Act, introduced in January by Senators Susan CollinsSusan Margaret CollinsPhotos of the Week: Schumer, ASU protest and sea turtles Real relief from high gas prices The Hill's 12:30 Report: Biden to announce increased measures for omicron MORE (R-Maine) and Claire McCaskillClaire Conner McCaskillLobbying world Ex-Rep. Akin dies at 74 Republicans may regret restricting reproductive rights MORE (D-Mo.) can increase the ability we have to protect our seniors by identifying fraud before it happens. 

At the state level, 12 states have enacted legislation or regulation based on NASAA’s Model Act to Prevent Vulnerable Adults From Financial Exploitation, and similar legislation is pending in several additional jurisdictions. The Model Act requires a securities broker or investment adviser with a reasonable belief that financial exploitation of an eligible adult has been attempted or has occurred to report it to a state securities regulator and adult protective services agency.  

These policies are necessary, but they are no substitute for everyday vigilance. It’s incumbent upon all of us — family, caregivers, industry, regulators and lawmakers — to not only respect, but to protect our seniors.

Mike Rothman is the president of the North American Securities Administrators Association, the oldest international investor protection organization. He is also the Minnesota commissioner of commerce. 

The views expressed by contributors are their own and not the views of The Hill.