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Compliance Concepts

How Well Do Broker-Dealers Service Senior Investors? NASAA Has Answers

July 5, 2017

[Photo:  Consumer Reports]


The North American Securities Administrators Association (NASAA) issued the results of a survey on the practices and procedures that broker-dealers employ to help protect senior clients. Sixty broker-dealers participated in the survey, which includes information about firm supervisory procedures, training, escalation and reporting of senior issues, resolution of senior issues, and use of trusted contact forms


“Being face-to-face with clients puts financial services professionals on the frontlines when it comes to stopping suspected cases of senior financial fraud and exploitation. As the U.S. population ages, the financial industry can help detect and report financial crime and abuse of the elderly and other vulnerable adults.” Mike Rothman, NASAA President and Minnesota Commissioner of Commerce.


STUDY HIGHLIGHTS.    The following statistics pertain to those broker-dealers who responded to NASAA’s survey:


  • 54% lacked a formal policy defining senior customers.
  • 34% had a dedicated team responsible for senior-related issues.

►  90% had either a dedicated team or at least some type of internal process for addressing senior issues.

  • 30% had created senior-specific policies and procedures.
  • 95% provided some type of training on senior issues; the most common - recognizing signs of elder financial abuse.
  • 94% had a formal process to internally report concerns regarding diminished capacity and/or elder financial abuse.
  • 19% did not have a decision-maker responsible for reporting concerns to agencies/authorities outside of the firm.
  • Reporting by firms to adult protective services occurred in at least 62% of internally escalated cases, but less frequently to local law enforcement (4%) or state securities regulators (<1%).
  • 49% did not disclose or identify any particular resource they used to assist senior clients.
  • 41% had developed a form for customers to identify an emergency or trusted contact person.


OVERVIEW, METHODOLOGY OF THE STUDY.    Respondents were asked to respond to 18 questions about their firm’s practices and policies applicable to senior customers. Responses were received in April and May 2016. Certain firms were removed from the analysis because they did not engage in retail securities business and had no senior clients. The selection of the broker-dealers for the study was random [Financialish: More likely ‘judgmental’] but tended to focus on larger firms..


The study also sought copies of policies and procedures regarding senior customers, any brochures about diminished capacity or elder financial abuse or exploitation, any forms used to collect the identification of a trusted or emergency contact person, and data regarding the number of cases reported to adult protective services or other authorities.


The following sections of this report summarize findings from the study with respect to:

  • supervisory procedures,
  • training,
  • escalation and reporting of senior issues,
  • resolution of senior issues (including resources used to assist senior clients), and
  • use of the trusted contact form.


[Click here for full NASAA Report.]