Brokers Dealing With Older Investors Get More Scrutiny

The Massachusetts securities regulator wants to know how often older investors complain to their securities firms, and what the firms do about it.

The Massachusetts Securities Division sent a questionnaire to 162 brokerage firms asking about complaints received from clients 65 or older over the past two years, including what products those complaints were related to. The regulators also want to know whether firms have policies and procedures that would amount to heightened oversight about transactions by senior investors.

“We have seen an increase in the actions brought by the Securities Division that involved senior investors in one way or another,” said a spokesman for Massachusetts Secretary of the Commonwealth William Galvin.

Elderly investors have caused increasing concerns for regulators and brokers nationwide. More than one-third of enforcement action taken by state securities regulators since 2008 involved senior investors, says the North American Securities Administrators Association.

The issues regulators and brokerages wrestle with range from problems brokers face communicating with clients who suffer from dementia to outright elder abuse—by brokers, by relatives, by friends.

With more brokerage clients reaching retirement, regulators want to know exactly how big a problem they are up against with bad brokers taking advantage of elderly clients’ trust and forgetfulness. Brokerage firms, meanwhile, struggle to determine what exactly they can do to properly advise clients who start to forget facts, dates, and conversations, and who might ask advisers to help them with unwise investment transactions.

Even lawyers seem to be a bit lost. The American Bar Association said earlier this month that attorneys “often fail to get involved” in elder-abuse issues, in part because they do not recognize the abuse or are unsure of their ethical obligations. The ABA added a webinar to raise awareness.

On Tuesday, a survey the ABA conducted with the Investor Protection Trust and the Investor Protection Institute revealed that more than one out of three attorneys says they are or may be dealing with the victims of elder investment fraud and financial exploitation.

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Brokers Dealings With Older Investors Get More Scrutiny