Senior Population Boom Tests Industry, Investors, and Policymakers
The aging of Texas – persons 65 and older are the fastest-growing segment of the state’s population – is challenging investors, the investment industry, and policymakers.
Senior citizens are more susceptible to fraud as they age due to the increasing chances of cognitive impairment, posing a danger to their financial well-being and making it imperative they can depend on trusted family members, caregivers, and legal and financial professionals.
Industry professionals are grappling with compliance and legal challenges in responding to the needs of older investors.
Policymakers have several avenues for legislation action in the upcoming legislative sessions.
The State Securities Board presents these resources to assist the financial industry, policymakers, and investors and their families in preventing fraud.
Resources for Industry
The North American Securities Administrators Association Guide for Developing Practices and Procedures for Protecting Senior Investors and Vulnerable Adults from Financial Exploitation is part of NASAA's Serve our Seniors initiative.
Having up-to-date policies and practices in place that address potential cases of diminished capacity and financial exploitation will better equip financial services professionals to: 1) recognize diminished capacity and financial exploitation; 2) understand when and how to escalate reporting of such issues within a firm; and 3) direct reports to governmental agencies that can conduct additional investigations and provide needed services.
The Guide is structured around five key concepts: identifying vulnerable individuals; governmental reporting; third-party reporting; delaying disbursements from client accounts; and continuing regulatory cooperation following reports or disbursement delays.
The Guide outlines the steps firms can take to identify and respond to issues that are common in working with senior investors and utilitze the new statutory tools available to address issues that give rise to senior financial exploitation and diminished capacity.
The National Senior Investor Initiative report by the Securities and Exchange Commission and the Financial Industry Regulatory Authority highlights industry trends regulatory initiatives concerning senior investors.
It discusses key observations and practices identified during the recent series of examinations of broker-dealer firms. The examinations focused on:
- The types of securities being sold to senior investors;
- Training of firm representatives with regard to senior specific issues and how firms address issues relating to aging (e.g., diminished capacity and elder financial abuse or exploitation);
- The use of senior designations;
- Firms’ marketing and communications to senior investors;
- Suitability of securities sold to senior investors and the disclosures provided to senior investors;
- Complaints filed by senior investors and the ways firms tracked those complaints; and
- Supervision of registered representatives as they interact with senior investors.
Seniors can call the Financial Industry Regulatory Authority for assistance with investment-related questions or to raise concerns with brokerage accounts and investments.
Two basic strategies can help seniors and their families lessen the chances of becoming a victim of investment fraud. One is to Practice Self Defense by following five simple steps. A second strategy involves questions and checklists that families, friends, and caregivers can use to help protect senior investors. Taken together, they can help investors avoid the devastating effects of financial fraud.
Know the common scams, schemes, or unsuitable investments that are often pitched to older investors.
A financial professional may use various titles whether or not he or she is registered or licensed with a regulatory. There are more than 50 designations that imply expertise in senior financial issues. Some are legitmate, some are not. A little research can go a long way in keeping investors away from individuals sporting questionable designations.
Texas is one of the youngest states in the nation, but given the Lone Star state's sheer size, the rapid growth of the 65-and-older population means there will be nearly 6 million senior Texans by 2030. Learn the demographic trends and which areas of the state are seeing the fastest-growing senior populations.
Commissioner John Morgan's Testimony Before the House Committee on Investments and Financial Services
Testimony on the Investments and Financial Services Committee's interim charge, "Evaluate what policies are currently in place to prevent the financial exploitation and financial abuse of aging Texans, and determine what changes need to be made to strengthen protections for this vulnerable population."
House Research Organization Report: State examines ways to curb financial exploitation of older Texans
The nonpartisan Texas House Research Organization examines current Texas law and policies regarding financial exploitation of seniors and issues the Texas Legislature may consider in the 2017 session.