Caregiving

How Financial Firms Help to Prevent Financial Exploitation

Crackdown aimed at protecting nest eggs of clients age 65 and older.

Regulators are adding new tools to help investment firms protect older clients against fraud. Starting in February 2018, the Financial Industry Regulatory Authority will require brokerages to ask clients for the name and contact information of a trusted individual who can be reached if the client appears to be a victim of financial exploitation.

Brokerages will also be able to delay disbursing money or securities from accounts of clients age 65 and older (or younger vulnerable adults) for up to 15 business days if financial exploitation is suspected, giving firms time to investigate and contact the client, a trusted person and, if necessary, law enforcement or adult protective services. Under current Finra rules, brokerages must maintain client privacy and execute orders promptly—regulations that, firms say, tie their hands when they suspect a client has been a victim of fraud or suffers from diminished capacity.

Similarly, the North American Securities Administrators Association has created a model law that permits firms to place a temporary hold on disbursements if financial exploitation of an older customer is suspected, but it requires them to notify adult protective services and state regulators. So far, 13 states have adopted some form of this law, including Texas, Oregon and Arkansas.

Firms, too, have launched senior protection programs. Wells Fargo set up an elder initiatives team three years ago that their advisers can contact for guidance on how to handle suspected senior fraud. In 2014, Wells Fargo handled about 100 such cases per month, and now, as the population ages and awareness of the problem grows, it’s as many as 225, says Ron Long, Wells Fargo’s director of regulatory affairs and elder client initiatives.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
Gen X: How to Make Sure Your Future Self Remains Funded
personal finance

Gen X: How to Make Sure Your Future Self Remains Funded

If you’re a Gen Xer, like me, now might be the right time to talk to a financial professional to learn more about how to adjust your retirement planni…
October 20, 2021

Recommended

Retirees, Get an Upfront Tax Break for Delayed Charitable Giving
Charity

Retirees, Get an Upfront Tax Break for Delayed Charitable Giving

A donor-advised fund allows you to deduct your contributions on your tax return today while postponing the actual charitable donations until later.
October 28, 2021
The Best Fidelity Funds for 401(k) Retirement Savers
Investing for Income

The Best Fidelity Funds for 401(k) Retirement Savers

Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in 401(k) plans…
October 25, 2021
From EBRI's CEO: What's on Retirees' Minds
Empty Nesters

From EBRI's CEO: What's on Retirees' Minds

Retirees feel more comfortable spending from steady sources of income rather than tapping their nest egg.
October 25, 2021
How Snowbirds Can Be Taxed as Florida Residents
retirement

How Snowbirds Can Be Taxed as Florida Residents

If you live in a high-tax state during the summer but winter in Florida, you can save big bucks by establishing residency in the Sunshine State.
October 25, 2021