New Rule on Elder Financial Abuse May Improve Broker-Client Relations

In 2017, around this time of year, securities industry regulatory body, FINRA (the Financial Industry Regulatory Authority) introduced new rules and regulations aimed at mitigating the financial exploitation of elderly Americans. According to statistics, senior financial abuse has been on the rise in the US for several years. As the enormous (and enormously wealthy) baby boomer population ages, they have increasingly become targets of various scams and schemes aimed at relieving them of some of their hard-earned savings and investments.

The Talk: FINRA Requires Brokers to Talk Trust with Senior Clients

The major development of FINRA’s new rule involves a requirement that brokerages make a reasonable effort to ascertain the identity of a “trusted person” from elderly investors who may be subject to fraud or misconduct. Brokerages are supposed to have “the talk” with senior investors as soon as possible, including when older investors first open investment accounts. The regulations call for brokerages to find out who the investor trusts in the event that that investor loses his or her mental capacity and/or is the target of a scam aimed at their money.

You can how that might be an awkward conversation.

Getting to Know Your Client

While the new regulation is squarely focused on attempted to prevent elder financial abuse, it may also have unintended benefits for investors and brokerages by bringing them closer together. Unfortunately, many brokers fail to really get to know their clients’ life situations before investing their money. The new rule would require and encourage that brokers go further in getting to know clients - including not just their financial situation but their personal and familiar situations. This could be a win-win.

Financial Exploitation and Investment Fraud Law Firm

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If you or someone you know has been the victim of senior investor abuse or financial misconduct, contact our securities litigation team immediately for a free consultation toll-free at 215 462 3330 or by using our online contact form.