The challenge of diminished capacity presents a major risk to your clients and their families if they are not prepared. It also presents a risk to the firm if you are not aware of how to address these issues. As the number of vulnerable investor exploitation claims grows, FINRA and the SEC have increased their scrutiny of firms providing inappropriate recommendations to vulnerable investors.
The result: firms must evaluate the risk of vulnerable investor financial exploitation to their clients, insure they have adequate policies, procedures and training for their staff.
How Can Firms Protect Themselves and their Vulnerable Investors?
One of the best ways a firm can protect itself and its vulnerable investors is to comply with regulations and use best practices to determine suitability. When considering best practices, educating employees and clients is a crucial component to preventing exploitation.
Oyster Consulting hosted a webinar addressing the new and amended FINRA rules, what firms should be doing now, and the need for escalation and review for reporting of disbursement holds and suspected exploitation.
How Oyster Consulting Can Help:
Developing policies, procedures, and training unique to your firm is time consuming, requires a deep knowledge of the subject and regulatory environment, and can have costly repercussions if it is not done correctly. Oyster Consulting has developed comprehensive Written Supervisory Procedures and Policies and Procedures that, once customized to your firms’ products and lines of business, will enable you to mitigate risks associated with vulnerable investor clients. When exploitative instances occur, Oyster’s Policies & Procedures provide guidance for identifying, reporting to appropriate state agencies, monitoring and resolving these events. Our training modules are thorough, easy to use, and can be quickly customized to your firm’s requirements.
Oyster can also provide Training and Education for your firm, helping to ensure your employees are trained to:
- Recognize the investment needs of vulnerable investors
- Ask specific questions to determine, beyond a normal suitability determination, based on common elder investors’ issues:
- Liquidity needs (upcoming expenses such as a grandchild’s college tuition or a known illness)
- An appropriate third party to take part in discussions beforehand and in case debilitating issues arise.
- Plans for estate and special needs
- Recognize red flags of vulnerable investor exploitation
- Document concerns and traits that indicate cognitive decline or impairment
- Escalate and report suspected activity/concerns
- Know and understand state-specific regulations specifically concerning client disbursement holds
The collective knowledge of Oyster’s consultants will save your firm time and provide the assurance that you are better protected. For more information on how Oyster Consulting can help your firm with its compliance needs, complete our contact form and one of our Relationship Managers will be happy to help you.
- State Vulnerable Adult Client Disbursement-Transaction Hold Reporting Requirements (Chart)
- FAQs Regarding Rules Relating to Seniors and Vulnerable Adults
- Elder Abuse Resources by State
- NASAA Securities Administrator Reporting
- Cognitive Decline: Biological, Psychological and Environmental Factors Influencing the Aging Brain
- The Neurology of Financial Decision-Making
- FINRA Senior Investors Hotline: 844-57-HELPS (844-574-3577)
Publications & Presentations
- Protection of Seniors from Financial Exploitation – Congress Enacts the Senior Safe Act – Bob Tuch – Practical Compliance & Risk Management for the Securities Industry – Wolters Kluwer. September/October, 2018
- Passage of the Senior Safe Act Will Provide Protection for Senior Investors – June 1, 2018
- Senior and Vulnerable Adult Client Protection: A Continuing Issue for the Securities Industry and Regulators – December 5, 2017
- Senior and Vulnerable Adult Clients: Are You Protecting Your Clients and Your Firm? – May 3, 2017
- Senior Investor and Vulnerable Adult Clients: Regulations and Best Practices to Keep Your Firm and Your Clients Protected – October 2016
- NASAA Legislation – Protecting Vulnerable Adults from Financial Exploitation – February 2016
- The SEC’s ReTIRE Initiative: An Examination Initiative Focused on Products and Services Provided to Retail Investors Saving for Retirement – Bob Tuch – Practical Compliance & Risk Management for the Securities Industry – Wolters Kluwer, Vol. 9 No. 1, January/February 2016
Looking Out for the Baby Boomers: Are You Protecting Your Clients and Your Firm?