National Association of Insurance and Financial Advisors

NAIFA Applauds Senior $afe Act of 2016

The U.S. House Committee on Financial Services is considering the Senior $afe Act of 2016 (H.R. 4538) in a markup session today. The bill would allow insurance and financial advisors to report suspected cases of financial fraud involving senior clients while limiting advisors’ liability when they act in good faith to protect their clients from potential fraud.
NAIFA President Jules Gaudreau made the following statement in a letter of support to the committee:
The National Association of Insurance and Financial Advisors (NAIFA) applauds your effort to strengthen financial protections for seniors. NAIFA supports the bipartisan, bicameral Senior$afe Act that would increase protections for senior Americans susceptible to financial and investment fraud.
For well over a century, thousands of dedicated NAIFA members have helped individuals and families reach their financial goals, and occasionally spot suspicious activities. The Senior$afe Act will remove barriers that might otherwise discourage the reporting of such suspected exploitation to authorities.
We look forward to working with you to put in place meaningful public policies to protect seniors from financial fraud and to incorporate protections for NAIFA members when reporting suspected financial abuse of a senior client. Thank you again for your leadership.

A Costly Problem
A 2011 MetLife study estimates that U.S. seniors lose an estimated $2.9 billion each year to financial fraud. A separate study by Allianz found that senior fraud victims lost an average of $30,000 each, and 10 percent lost $100,000 or more.
The Allianz study also found that seniors who regularly speak about their finances with trusted third parties, including financial professionals, are significantly less likely to be fraud victims, which is why the Senior $afe Act and similar legislation in the states is so important.
State Efforts
Apart from the federal effort, NAIFA has been active in a number of states supporting proposals that would allow advisers to protect senior clients from fraud. NAIFA is also working with other groups, including FINRA, NAASA, NAIC and NCOIL, to develop model state legislation.
In July 2015, the NAIFA Board of Trustees approved a policy statement which recommends that the NAIFA federation proactively support senior-protection legislation provided that it contains certain provisions: 
  • A voluntary reporting process where the advisor, upon suspecting attempted fraud on a client, would report the matter to the firm (i.e. broker-dealer or insurer). The firm could then alert the appropriate state authorities, and, at the firm’s discretion, delay a suspicious requested transaction. This process would allow the firm’s legal and compliance personnel to review the questionable transaction with greater scrutiny.         
  • A legal “safe harbor” provision where advisors and their firms would be immune from liability for following the law’s provisions. Advisors and their firms should be encouraged to report potentially fraudulent transactions to protect their senior clients’ assets.
  • A provision that would permit the state insurance department to provide training resources to advisors on how to recognize signs of cognitive decline while clearly acknowledging that advisors are not medical professionals and will not be held responsible for determining a client’s cognitive condition.
  • Posted June 15, 2016 IN

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