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Financial Advisors Role in Preventing Elder Financial Exploitation

Financial Advisors Role in Preventing Elder Financial Exploitation, featured by top securities fraud attorneys, The White Law Group

Elder Financial Exploitation on the Rise

Elder abuse includes theft, fraud, misuse of a person’s assets or credit, or use of undue influence to gain control of an older person’s money or property should be on the alert.

Seniors may be especially vulnerable to financial fraud if they are cognitively impaired or simply confused by complex financial opportunities or products. Advances in technology can make things even more complicated for seniors.

Further, studies have reportedly shown that people tend to make poorer financial decisions as they get older. They also are often lonely and more willing to talk to strangers.

Elder Financial Exploitation Under-reported

In 2011, Investment News reported older Americans were being financially abused by family members, strangers and businesses to the tune of $2.9 billion a year. Now in 2019, depending on which report you look at, the numbers range from $3 billion to $37 billion per year. Most likely those numbers are vastly under reported. According to National Adult Protective Services Association (NAPSA), only 1 in 44 cases of financial abuse ever comes to light.

Other data compiled by the U.S. Consumer Financial Protection Bureau show that between 2013 and 2017, those over age 70 lost an average of $41,800 to elder financial exploitation.

Financial Advisors play an essential role.

As the keeper of your money, the first line of defense against elder financial exploitation could be your financial advisor.

The Senior Safe Act was passed into law in 2018, calling on financial institutions to train their employees on how to detect suspicious activity that might indicate elder abuse. However, some financial advisors still may not feel comfortable identifying if a client is losing mental capacity or being exploited by a family member or friend.

Fortunately, the Financial Industry Regulatory Authority (FINRA), provides rules to its members to respond to situations in which they have a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted or will be attempted.

FINRA Rules regarding Financial Exploitation of Seniors

While FINRA Rule 2010  (Standards of Commercial Honor and Principles of Trade) protects against brokers being beneficiaries on clients’ estates (in order to prevent possible conflicts of interest), after the recent upswing in elder financial abuse, FINRA put in place the first uniform, national standards to protect senior investors.

The SEC approved the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults), as well as amendments to FINRA Rule 4512 (Customer Account Information),

FINRA Rule 4512

The Customer Account Information rule requires members to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer’s account or when updating account information for a non-institutional account. The trusted contact person is intended to be a resource for the member in administering the customer’s account, protecting assets and responding to possible financial exploitation.

FINRA Rule 2165

The Financial Exploitation of Specified Adults rule permits, under FINRA rules, a member that reasonably believes that financial exploitation has occurred, is occurring, has been attempted or will be attempted to place a temporary hold on the disbursement of funds or securities from the account of a “specified adult” customer. Specified adults include a natural person age 65 and older or a natural person age 18 and older who the member reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.

Warning Signs of Elder Financial Exploitation

With in-depth access to a client’s financial activity, financial advisors have the unique opportunity to help protect their elderly customers from people attempting to defraud them. The following are a few ways that advisors and financial institutions may be able to protect their customers.

  1. Account balances:Financial advisors may notice, based on past activity, if their customer’s accounts are decreasing and why.
  2. Types of Transactions:Sudden changes such as wiring money out of their account or transferring funds using online banking should be investigated. Advisors should take note of any outgoing wires and large ATM withdrawals.
  3. Account Access: If a new person becomes involved in the client’s life, in a romantic capacity or otherwise this could be a warning sign, especially if the new individuals are suddenly given access to the customer’s accounts.

Free Consultation with a Securities Attorney

If you or someone you know has been the victim of elder financial fraud, the securities attorneys of The White Law Group may be able to help.To speak with a securities attorney, please call offices at (888)637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information on The White Law Group, please visit our website at


Tags: , , , , , Last modified: November 5, 2019