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Guide to Elder & Vulnerable Client Protection for Third Party Administrators
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2. Purpose of the Training
Protecting our Clients & Complying with State and Federal Laws
Recognizing Cognitive Impairment
Recognize Elder or Vulnerable Client Exploitation
What is Cognitive Impairment
Who is Impacted
Warning Signs
Who is Responsible for Detecting
How Can We Protect Our Clients
Authentication Practices
Reporting
Investigating
Available Resources
Red Flags
Prevention
Resources
When to Start Discussing Methods of Protecting Assets
Trusted Contacts
Powers of Attorney
Guardians
How to Escalate
Contacts
Protecting our elder and vulnerable clients is serious business.
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3. FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Senior Facts
There are 75 million baby boomers in the U.S.; by % of the population will be 65 years old or older, according to a census bureau report in June 2015.
On January 1, 2011, the oldest members of the baby boom generation turned 65; 10,000 will turn 65 each day until the year 2030 (The Baby Boomer Number Game, U.S. News & World Report, March 2012)
Baby boomers control $16 trillion in household income (LIMRA Regulatory Review, April 2011); in 2010, according to a MetLife survey there was a $2.9 billion loss in financial abuse of elders. Abuse is expected to increase, and much goes unreported.
One in every nine people in the U.S. age 65 or older has Alzheimer’s; 5.1 million with the disease in 2014 (2014 Alzheimer’s Disease Facts and Figures, Alzheimer’s Association, )
Approximately one in 25 adults (or around 10 million) in the U.S. experiences a serious mental illness in a given year that substantially interferes with or limits one or more major life activities.
52% of abuse is by caretakers, including family members; 22% is by third parties, according to a recent Allianz study on aging.
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4. Legal and Regulatory Landscape
Nevada
Add to the Script:
Various regulators, federal and state, have laws or proposed regulations to protect elder and vulnerable adults.
The SEC and FINRA identified the prevention of financial exploitation as an ongoing focus in their regulatory exams.
Regulators have emphasized the importance of firms and financial advisors to report financial expectation where regulators require it and have proposed regulations enhancing protections for these clients. Some of the propose regulations include mandatory reporting of financial exploitation.
IMPORTANT: Regulators have emphasized the importance of identifying, reporting and responding to suspected financial exploitation under existing regulations. New laws and regulations are being proposed by federal and state regulators to help protect the elderly and vulnerable adults from exploitation.
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5. What is Elder Exploitation
The North American Securities Administrators Association defines “exploitation”:
The wrongful or unauthorized taking, withholding, appropriation, or use of money, assets or property of an eligible adult [defined as 65 years or older or a person subject to adult protective services in the state of residence]; or
Any act or omission taken by a person, including through the use of a power of attorney, guardianship, or conservatorship of an eligible adult to:
Obtain control, through deception, intimidation or undue influence, over the eligible adult’s money, assets or property to deprive the eligible adult of the ownership, use, benefit or possession of his or her money, assets or property; or
Convert money, assets or property of the eligible adult to deprive such eligible adult of ownership, use, benefit or possession of his or her money, assets or property.
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6. Elder and Vulnerable Clients - Prime Targets for Exploitation
Easy targets
Many live alone and are socially isolated
Dependent on others
Caretakers have access to account and personal information
Mature assets/wealth
Not accustomed to technology
Less likely to report being a victim
Could be suffering from other forms of abuse
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7. What is Cognitive Impairment
“Cognitive impairment is when a person has trouble remembering, learning new things, concentrating, or making decisions that affect their everyday life. Cognitive impairment ranges from mild to severe. With mild impairment, people may begin to notice changes in cognitive functions, but still be able to do their everyday activities. Severe levels of impairment can lead to losing the ability to understand the meaning or importance of something and the ability to talk or write, resulting in the inability to live independently.” Source:
NOTE: Not every temporary loss of memory or mental clarity indicates diminished capacity. Other factors that may play a role include:
Lack of Sleep
Medication
Diet
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8. Understanding the Warning Signs of Cognitive Decline
Unusual or sudden memory problems
Sudden change in character or habits
Unusual or sudden difficulty in understanding financial terms or concepts
Requests for distributions to third parties or other unusual withdrawals
Frequently repeating orders or questions
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9. Preparing your Clients
Take steps now to help protect our clients, before any issues arise regarding diminished capacity or other age-related problems
Prepare clients
Obtain a trusted contact, preferably a non- family member
Obtain emergency contact information
Obtain privacy waiver
Educate client or refer them to an attorney with regard to techniques and legal alternatives such as:
Power of Attorney
Create a Trust
Estate Planning
Financial and insurance professionals assisting elder and vulnerable clients are in a unique position to detect and help prevent, where possible, financial abuse.
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10. FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
How You Can Help
Important ways you can help a client who shows signs of cognitive impairment:
Get someone else involved.
Ask the client to provide a name of a trusted contact.
Keep the conversation simple – don’t over communicate details and speak clearly.
Be patient – show you understand how the client feels.
Do not try to interpret what the client says…..Don’t assume.
In face-to-face meetings, sit close and make contact.
Repeat, rephrase and summarize the conversation.
Use caution dealing with caregivers, especially a new caregiver.
When in doubt, escalate to your supervisor/manager and contact the EVCC for guidance.
AIG Consumer Compliance Elder and Vulnerable Client Care Unit (EVCC) is an intake center for reports of potential elder and vulnerable client exploitation concerns as well as an employee resource center for guidance on the handling of elder and vulnerable client issues.
Many forms of dementia are progressive Act quickly at the first signs of an issue.
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11. Keep Privacy Considerations in Mind
You may be tempted to enlist the client’s spouse, child or close friend to help you in your interactions. Before you can do so, you MUST receive specific authorization from the client. This can be in the form of a Power of Attorney or written authorization.
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12. Document and Follow-up
Document all conversations and meetings:
Be specific and non-judgmental in what you write; as with all file notes, these could wind up as evidence in a complaint situation, legal case, or arbitration.
Use summary letters:
Follow-up to client meetings.
“Client asked three times in a one-hour meeting who the beneficiary is on her policy”
“Client was 30 minutes late because he got lost on the way to the office, even though he has been here many times before and is usually on time or early”
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13. Document, Document, Document!!!
To be able to answer questions that might arise about the suitability, or appropriateness of sale or the handling of a transaction, you should have documentation in the client file establishing:
The transaction requested.
Individuals involved in the conversation.
The information collected; authentication process used.
Documents collected.
The review process for determining appropriateness of the sale/transaction.
Review process for determining that recommendations, if any, were suitable.
That the risks and costs were discussed with and understood by the client.
Concerns identified.
How concerns were escalated and the actions taken.
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14. When to Escalate….Potential Signs of Exploitation
In the following circumstances immediately report to EVCC at the Helpline: or
Unusual or multiple requests for change of beneficiary or address on client’s accounts; changing the beneficiary from a family member to a third-party or from multiple children to just one; death bed beneficiary changes.
Signature on request form does not appear to match signature on file; abrupt changes made to those who can access accounts (e.g. Change of Power of Attorney).
Transaction requested is not a typical transaction for the client; client cannot provide valid reason for transaction; there is a disregard to penalties.
Transaction requested is not in the best interest of the client; client suddenly has an inability to make payments on the account.
Client is speaking to third-party and seeks answers to your questions from a third party rather than answering the questions directly.
Caller/client appears confused, is forgetful, asks to repeat questions several times.
Third party with access to the account will not allow you to speak directly with the client or shows excessive interest in client’s account.
Issues around elder and vulnerable clients can be ambiguous and unclear. Regardless, report matters where you suspect financial exploitation to your manager and the EVCC. When in doubt……report out!
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15. FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION
Immediately escalate matters where elder or vulnerable client financial exploitation is suspected to the EVCC.
Various states have immediate notification requirements triggered by the date the financial exploitation is detected. Not immediately reporting and escalating matters of elder or vulnerable client financial exploitation could put the company and the client at risk.
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16. American International Group, Inc
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