NAIFA Policy Statement Supports Protecting Senior Investors

NAIFA members have dedicated their careers to providing financial security and protection for their clients. The association has a long history of supporting laws and regulations that provide clients with needed safeguards, including those limiting stranger-originated life insurance transactions, ensuring the proper use of designations by financial professions, and requiring stringent licensing requirements for insurance and financial advisors.
In the same spirit, the NAIFA Government Relations Committee proposed and the NAIFA Board of Trustees approved a new policy statement on the protection of senior investors.  

"NAIFA members are dedicated to protecting their senior clients," said NAIFA President Juli McNeely. "Advisors are on the front lines and often have a unique understanding of the situation when an unscrupulous individual tries to prey on a senior client. The new policy statement formalizes NAIFA's support for state laws that would allow advisors to help their clients in these situations without subjecting the client or advisor to undue risk."

NAIFA Policy Statement:  Senior Investor Protection
NAIFA generally supports state legislation intended to protect seniors from possible financial exploitation. Each year, vulnerable seniors are victims of actions by unscrupulous individuals – particularly seniors suffering from cognitive decline. In the coming years, millions of Americans will be transitioning from the workforce into retirement and will be living on fixed incomes and other assets that need to be preserved in order to protect their financial independence and security. 
To ensure that seniors are protected from financial abuse, an increasing number of states are considering enacting measures which would create a process designed to identify financial crimes against seniors and prosecute those involved. Several states have already enacted laws that allow financial advisers to report suspicious transactions involving their senior clients to their firms*, who can then notify appropriate state authorities that can conduct an investigation to determine if a questionable transaction may be fraudulent. Other states are considering legislation that would permit supervisory persons at firms to impose a temporary “hold” on transactions where the firm believes the client is a potential victim of financial abuse.  Some states are considering legislation that proposes to enact both approaches. 
Many NAIFA members serve senior clients and often have detailed knowledge of their clients’ financial affairs. As such, NAIFA members can often play a critical role in protecting their clients’ assets against fraud and exploitation. While NAIFA supports the efforts by states to safeguard our nation’s seniors from financial fraud, in order to treat both advisers and their clients in a fair and equitable manner these proposals should incorporate the following provisions and principles: 

  • Create a voluntary process whereby advisers can notify their firm or the firm’s supervisory personnel of a possible suspicious financial transaction involving a senior client’s property, funds, or account, and the firm can then inform the appropriate state authorities of the potential fraudulent activity.
  • Clearly state that any such permitted action by advisers and/or their firms is purely voluntary in nature and that any such authority does not create any obligation to take the permitted action.
  • Permit the firm to temporarily delay the senior client’s requested disbursement or transaction to allow state authorities the opportunity to investigate the suspicious investment.
  • Include a “safe harbor” provision providing advisers and their firms with complete immunity from liability for their reasonable actions taken in connection with reporting the suspicious account activity, temporarily delaying disbursements from accounts where fraud is suspected, and following the provisions of applicable state law.
  • Permit the appropriate state agency to provide training resources to inform advisers on how to recognize signs of cognitive decline in seniors, while clearly acknowledging that advisers are not medical professionals and shall not be held responsible for determining a client’s cognitive condition. A firm’s use of such state resources should be voluntary, since many firms already have training programs of this nature in place for their advisors. However, a firm’s training program in this area should not be intended or designed as a marketing resource for the firm’s product offerings.

*Firms defined as broker-dealers, insurance carriers, etc…  

  • Posted July 24, 2015 IN

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