NASAA: nearly 60% of state councilors lack policies protecting seniors


Nearly six in 10 state-registered investment advisers lacked policies and procedures to help them identify and protect the elderly or vulnerable from “financial abuse,” according to the report. an analysis of a series of exams by the North American Securities Administrators Association (NASAA).

NASAA looked at the results of 1,206 investment advisor reviews for analysis, 68% of which were from one-person companies. The previous exam was completed in 2019 and this year’s exams were held between the start of the year and July 7. In total, state securities examiners reviewed 289 RNs for the first time, with most exams conducted remotely.

A total of 58.5% of respondents said they did not have the appropriate policies or procedures in place to protect older people at risk of exploitation. Additionally, 23.5% of those surveyed said their company did not have training available for suspected financial abuse of vulnerable investors, with just over 8% stating that the training content ‘does’ was not maintained by the advisor ”.

NASAA President and West Virginia Assistant Securities Commissioner Lisa Hopkins said the results showed advisers needed to improve the way they identify and report when they suspect someone is taking advantage of an investor .

“Our hope is that this data will promote greater and earlier detection and reporting of suspicions of financial abuse by older Americans,” Hopkins said.

The overall review was broad in scope, looking for various gaps. Among them According to NASAA analysis, 44% of respondents said they had at least one gap in ‘the record’, while 41.7% said the same in ‘books and records’, and 30.5% replied the same with regard to “contracts”. Regarding recording gaps, about one in five respondents reported “inconsistencies” between parts 1 and 2 of their Form ADV. according to NASAA analysis.

Among the categories available, only the number of respondents reporting at least one gap in the areas of ‘supervision and compliance’, ‘advertising’ and ‘guarding’ increased between 2019 and 2021. In contrast, respondents reporting gaps in this area cybersecurity has dramatically in 2019 at 5.3% in 2021. Mississippi Securities Division Director Michael Huggs said cybersecurity was a NASAA priority and the association was “happy” with the drop. .

“I think the investment advisory industry understands the importance of cybersecurity and is starting to implement policies and practices, as well as taking advantage of the free cybersecurity checklist offered by NASAA to help to assess their cybersecurity practices, ”Huggs said.

In June, NASAA partnered with the Securities and Exchange Commission and the Financial Industry Regulatory Authority to free up training resources To better help businesses, affiliate brokers and advisers identify potential cases of financial abuse from senior investors. They wanted the training to help companies comply with the Senior Safety Act 2018. In many cases, complying with the law can protect certain financial institutions, including advisers and b / ds, from civil or administrative liability, provided they report their suspicion.

Financial abuse of the elderly can be a significant burden on victims; a 2019 analysis by the Consumer Financial Protection Bureau found that exploited seniors suffered an average loss of $ 34,000 in total.

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