Financial Advisors Suspect Abuse Of Older Investors On A Regular Basis

Posted on June 18, 2018

Financial Advisors Suspect Abuse Of Older Investors On A Regular Basis

WASHINGTON, D.C. – Today, on World Elder Abuse Awareness Day, the Insured Retirement Institute released the results of a new survey it conducted of financial advisors about their interactions with older clients, which found that advisors often suspect their clients are being exploited and that most frequently the exploitation is being perpetrated by friends or family members.

“Older investors are particularly vulnerable to exploitation due to declining cognitive abilities and the effect that has on their ability to discern between legitimate and fraudulent investments,” said Cathy Weatherford, President and CEO of the Insured Retirement Institute. “At IRI, on this World Elder Abuse Awareness Day, we are proud to announce new efforts to increase awareness about the financial exploitation of older investors, provide training for financial advisors to help them detect and protect their clients and a re-dedication of our efforts to advocate for programs and policies to protect older investors from being exploited. Our effort is rooted in economic as well as moral interests.”

According to the survey results released today, older investor exploitation may be more prevalent than many people realize:

  • More than half of financial advisors suspect cases of exploitation of older investors on a regular basis – ranging from a few times a year to weekly occurrences.
  • The most frequent type of abuse (cited by 60 percent of the advisors) is misuse or attempted misuse of funds by trusted family members or friends.
  • Nearly all the financial advisors in the survey do not believe they would be legally liable if they were to report a case; however, many may not be aware that a new federal law will require them to complete training approved by regulators in order to be shielded from liability.
  • Nearly all of the firms represented in the survey provide guidance and training on how to identify and report financial abuse, though each firm will now need to review the training it provides to determine if its content meets the requirements of the new law.
  • Most advisors would report cases to a dedicated fraud department in their company or their office of supervisory jurisdiction.

IRI announced today several new activities taking place through its Protecting Older Investors initiative:

  • IRI, AIG, and the Congressional Elder Justice Caucus will hold a Protecting Older Investors: A World Elder Abuse Awareness Day Capitol Hill Panel today, Friday, June 15, from noon to 1:30 PM in 2167 Rayburn House Office Building.
  • IRI will be advocating for several measures that will protect older investors, including: ensuring that state adult protective service agencies have the resources they need from the federal government to investigate and combat financial exploitation of our elderly population.
  • New training materials and resources will be designed to guide financial advisors on how and when to report cases of suspected abuse.
  • A broad awareness campaign will reinforce the message of protecting older investors.
  • IRI will lead a Protecting Older Investor Summit on October 17, 2018, in Washington, DC.
  • A new online resource center.

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Contact: John Jennings