A recent survey revealed shortcomings in the ability of investment advisers to protect elderly clients from financial abuse, InvestmentNews reports.
Coordinated examinations of 289 state-registered investment advisers were conducted by the North American Securities Administrators Association, an organization of state regulators.
The initiative found that over 58 percent of the advisers had no policies or procedures in place to address financial exploitation of seniors or vulnerable persons. 23.5 percent did not provide training for advisory personnel in this area, and nearly 18 percent were lacking in appropriate supervision.
Ranked by the number of deficiencies, the top five leading areas were registration, books and records, contracts, supervision and compliance, and advertising. One area where deficiencies declined from the last examinations was cybersecurity.
The NASAA said the results showed that investment advisers must improve their efforts to recognize and report suspected abuse. “Our hope is that this data will foster greater and earlier detection and reporting of suspected financial exploitation of older Americans,” said NASAA President and West Virginia Senior Deputy Commissioner of Securities Lisa A. Hopkins.
The examinations in 42 U.S. jurisdictions were conducted mostly virtually due to the pandemic.
The NASAA says financial exploitation is the fastest growing category of elder abuse in many states. The organization hopes to encourage more states to adopt its 2016 model act, which gave industry participants and state regulators new tools to help detect and prevent financial exploitation of vulnerable adults. The measure, which includes mandatory reporting of suspected abuse, has been enacted in 32 states.
At Lewitas Hyman, we have experience dealing with a broad range of claims that rise to the level of financial advisor misconduct, including elder fraud, retirement planning negligence, and failure to supervise. If you suffered investment losses as a result of misconduct by your financial professional or their firms, contact our Chicago elder attorneys at (888) 655 6002 or through our online contact form for a free consultation.