How Firms Should Respond To The Aging Financial Advisor Workforce

June 8, 2018


Publication
Financial Advisor

Joshua D. Jones
Matthew I. Penfield


As every financial advisor knows, the U.S. investing population is aging at a significant clip. It makes sense then that baby boomers account for the lion’s share of investable assets. And firms have made significant efforts to help these investors both grow and protect these assets. Despite these efforts, the federal government estimates that the costs of financial fraud against seniors exceed $2 billion annually.

Not surprisingly—given these numbers and the accompanying political clout wielded by seniors—regulators and legislators are keenly focused on protecting the elderly and other vulnerable clients from exploitation by third parties and unscrupulous investment professionals. On the legislative side, Congress recently passed the Senior Safe Act in an effort to spur financial firms to report concerns regarding possible financial exploitation of seniors. President Trump has signed the Act into law. Similarly, 13 states have adopted versions of the North American Securities Administrators Association’s Model Legislation or Regulation to Protect Vulnerable Adults from Financial Exploitation, which seeks to accomplish the same goal. On the regulatory side, the Financial Industry Regulatory Authority Inc. (Finra) has implemented Rule 2165, permitting member firms to place a temporary hold on disbursements from accounts upon a reasonable belief that financial exploitation “has occurred, is occurring, has been attempted or will be attempted.” Finra also amended Rule 4512 to require firms to make “reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a customer’s account.” 

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