SIFMA Senior Investors Forum


“Senior Investors Forum”

Tuesday, October 13, 2015 

Key Topics & Takeaways

  • Senior Investor Vulnerability Dr. Denburg explained that senior investors’ vulnerability to fraud and exploitation arises out of a medical condition that is very difficult to detect without thorough medical testing.
  • Senior Investor Protection Proposals:  NASAA and FINRA are both in the process of developing proposals intended to help industry members protect their senior clients.  However, as addressed in both Panel 1 and Panel 4, while the industry strongly supports the intent of the proposals, there are some specific concerns about the implementation process.
  • Training and Escalation Panelists discussed the importance of effective escalation procedures as a part of ongoing training processes, as well as the development of new materials to ensure that advisors receive as much support as possible.
  • Cooperation with APS Organizations Kathleen Quinn spoke about the importance of cooperation between APS organizations and the securities industry, and highlighted several key areas where the relationship could be strengthened.
  • Investor Preparedness Panelists stressed the importance of advisors working with clients early and laying the necessary groundwork to prepare for possible age-related issues in the future.
  • Voluntary Reporting:  Panelists explained how voluntary reporting jurisdictions foster more effective and efficient reporting procedures than jurisdictions that mandate reporting.


  • Kenneth E. Bentsen, Jr., President and CEO, SIFMA
  • Natalie L. Denburg, PhD, Associate Professor of Neurology and Neuroscience, University of Iowa Carver College of Medicine
  • Ira D. Hammerman, Executive Vice President and General Counsel, SIFMA
  • Joseph Borg, Board Member, NASAA Senior Issues and Diminished Capacity Committee & Director, Alabama Securities Commission
  • Ann-Marie Mason, Director and Counsel of Shared Services, Litigation and Policy, FINRA
  • Kevin W. Goodman, National Associate Director, Office of Broker-Dealer Examinations, SEC
  • Ronald Long, Senior Vice President and Director of Regulatory Affairs and Elder Client Initiatives, Wells Fargo Advisors
  • John Ellis, Principal, Edward Jones
  • Kim E. Perry, Vice President, Fidelity Investments
  • Timothy Keeton, Assistant Vice President, Senior Investors and Advisors Compliance, LPL Financial
  • Rocco Procopio, Executive Director and Head, Field Compliance Department, Morgan Stanley Wealth Management
  • Kathleen Quinn, Executive Director, National Adult Protective Services Association
  • Steven M. Samuels, Managing Director, Client Segments and Advisor Development, Merrill Lynch Wealth Management
  • Emily Boothroyd, Financial Planning Specialist, Westport Resources
  • W. Barton Close, Senior Vice President, Investments, Raymond James and Associates, Inc.
  • Amy Daniels, Financial Advisor, Edward Jones
  • Deborah Juran, Senior Vice President and Financial Advisor, Senior Consulting Group, RBC Wealth Management
  • Rocco Papandrea, Senior Vice President, Wealth Management, Bank of America Merrill Lynch
  • Marin E. Gibson, Managing Director and Associate General Counsel, State Government Affairs, SIFMA
  • Amanda Demas, Assistant General Counsel and Vice President, Chase Wealth Management
  • Christopher S. Majeski, Managing Director and Compliance Executive, Bank of America Merrill Lynch
  • Thomas M. Mierswa, Jr., Executive Director, Legal and Compliance, Morgan Stanley
  • Melissa Shea, Vice President and Associate General Counsel, Fidelity Investments

Opening Remarks

Kenneth E. Bentsen, Jr., President and CEO, SIFMA

In his opening remarks, Bentsen noted SIFMA’s work at the state and federal levels to protect senior investors from financial exploitation and described the ongoing dialogue with the financial services industry, scientific and policy experts, law enforcement, advocates, social services, and others. He stressed that the financial services industry has made protecting seniors from financial exploitation a priority and that the industry is working with policy makers to update laws and regulations to address the emerging issue.

Bentsen explained that Washington State, Delaware, and Missouri have passed legislation to protect seniors, while the Financial Industry Regulatory Authority (FINRA) and North American Securities Administrators Association (NASAA) are working on proposals.  He concluded that while there have been “great strides” in developing practices to protect senior investors, educating policy makers to create a national standard must continue and internal practices within firms must continue to be improved.

Keynote Address

Natalie L. Denburg, PhD, Associate Professor of Neurology and Neuroscience, University of Iowa Carver College of Medicine

In her keynote address, Dr. Denburg provided an overview of the science behind age-associated executive impairment, discussing age-related changes to the brain that lead to poor financial decision making.  Denburg explained that while most individuals associate memory impairment with the aging process, there is actually a stronger correlation between aging and executive (decision-making) impairment.  She further highlighted that the elderly, who often have notable resources due to lifetimes of saving, can fall prey to fraud due to this cognitive vulnerability – a vulnerability which often falls well short of bona fide dementia.

Dr. Denburg subsequently raised a series of three studies which have begun to give researchers significant insight into this issue.  She explained that, taken together, these studies show there is a significant portion of older adults suffering from a type of cognitive impairment which inhibits an individual’s emotional responses in the decision making process.  For example, while most younger unimpaired adults may get a “bad feeling” about a questionable situation and most older unimpaired adults may get a “good feeling” in beneficial situations, older impaired adults do not receive either positive or negative emotional feedback.  The studies further demonstrate that when older impaired adults were provided false or misleading advertisements, they were significantly less likely to understand – and more likely to want to purchase – the misleading or fraudulent product than their unimpaired counterparts, thus creating a vulnerability to financial exploitation.

Dr. Denburg then emphasized the difficulty in diagnosing this complication.  She noted that the subjects of her studies were successful professionals and many of them rated very highly on intelligence tests, including subjects with an IQ over 140.  She further highlighted several case studies where her initial diagnosis proved to be incorrect after the performance of testing (including the use of Functional MRIs).

However, Dr. Denburg also provided examples of how this research could be beneficial from a policy perspective, and discussed the development and enactment of a Reverse Mortgage Disclosure law in California, which she helped to develop.  Specifically, applying the lessons learned from the above-mentioned studies, proponents crafted a more effective disclosure “worksheet” for individuals considering purchasing a reverse mortgage in California.  This law provided a strong example of how science could inform pre-existing processes to make them more effective, she said.

Panel 1: Regulatory Structure and Challenges


Kevin Goodman of the Securities and Exchange Commission (SEC) stated that the organization’s priorities for both 2015 and 2016 include a focus on retail investors in general, and retirement savers and senior investors specifically.  He noted that 44 exams and a joint SEC/FINRA report revealed that most institutions are “trying to do the right thing” in this space.  However, Joe Borg, the Director of the Alabama Securities Commission and a North American Securities Administrators Association (NASAA) Board Member on their Senior Issues and Diminished Capacity Committee, noted that the low interest rate environment, the drop in prevalence of pension plans, the growing senior population and senior vulnerability to fraud created a dangerous environment.  Specifically, panelists noted a continued focus on the regulation of “free lunch” seminars and adherence to the senior designation guidelines released several years ago.

Ann-Marie Mason of FINRA noted that the FINRA Senior Helpline has received over 1,700 calls, many of them from individuals seeking more information regarding a purported financial advisor and/or certification.  Borg noted that those using false certifications were usually small, unlicensed brokers or investment advisors.  Borg also noted his offices’ ability to bring criminal charges in such situations.

Senior Investor Resources

Mason highlighted the benefits of anonymity in FINRA’s Senior Helpline, and it was noted that over ¼ of complaints received by NASAA in 2014 were from senior investors.  Panelists hoped that the helpline, as well as state senior investor protection efforts would lower the number of unreported financial abuse cases.  Borg also mentioned the Alabama Senior Investor Resource Center as a helpful resource.

In response to a question, Mason detailed how hotline complaints were resolved, the vast majority of the time, by FINRA placing phone calls to financial institutions.

Senior Investor Protection Proposals

Panelists subsequently discussed two senior investor protection proposals: draft model legislation released for comment by NASAA and a proposal from FINRA that was expected to be released for comment within the next week.  These proposals are attempts to provide firms with a pathway for reporting instances of suspected financial exploitation and taking steps to prevent harm to senior investors and vulnerable adults from exploitative transactions, they said.  Specifically, Mason noted the FINRA proposal’s attempt to alleviate concerns related to Reg S-P privacy requirements.

Mason further noted that FINRA was particularly interested in receiving industry input on the proposed time period lengths in the proposal, as well as any possible adverse impacts or increased litigation risks that might be caused by the proposal.  Panelists also called for congressional action on this issue.

A number of questions were asked regarding the specifics of both proposals and significant concerns were raised by industry members in the audiences, including concerns over the procedures for handling exploitative ACATS requests. They noted that the speed with which such transfers occur and the current processing procedures would make addressing such exploitative transactions difficult within the framework of either the FINRA or NASAA proposals.

Concerns were also raised about the FINRA proposal requiring a reasonable effort to secure a “trusted contact” from a client and subsequently mandating firms to reach out to that contact in cases of suspected financial exploitation.  Mason replied that the mandate was put in place in order to circumvent the requirements in Reg S-P.

Panel 2: Developing an Effective Internal Training Program


Each of the panelists detailed their firm’s training programs, and highlighted escalation training as a common topic.  Panelists spoke of both online and in-person training, which includes new hire training, field training and online modules.

With states such as Nevada coming out with new rules regarding training new hires on elder abuse, John Ellis from Edward Jones stated that his firm is working on a uniform training program that can be used in each state to “kill 50 birds with one stone,” rather than creating different programs based on each state’s rules.

When asked if there is a fear that a firm’s training program will be used against them during litigation, Ellis responded that this has not been an issue so far. Kim Perry from Fidelity Investments added that it is a bigger risk for associates to not recognize the red flags of financial exploitation than to not train associates.

When asked about what panelists see as the “next frontier” for training, Perry suggested training associates more on how to have difficult conversations with clients, saying that the more firms can do to support associates, “the better.” Tim Keeton from LPL Financial agreed, adding that it is “important to get a better dialogue for advisors,” and that it is “never too early” to secure a trusted or emergency contact person for a client, or start talking about diminished capacity.  Rocco Procopio from Morgan Stanley Wealth Management stated that financial advisors (FAs) should be trained on how to engage in dialogue early on, and Ellis added that FAs need to get comfortable with the client’s family early in the process as well.

Escalation Process

Ellis described Edward Jones’s escalation process, stating that FAs are required to alert their supervisors so they do not have to “diagnose” clients themselves, and so supervisors can provide advice and guidance as needed.  Keeton noted their similar policy, explaining that advisors alert their supervisors and senior investor compliance personnel to resolve issues.  Perry stated that her firm requires escalation because alerting a client that they need assistance managing their finances “isn’t easy.”

Communicating with Trusted Contacts

When asked who is tasked with making calls to trusted contacts, Procopio stated that the advisory legal team makes necessary contacts, while others explained that the associate who has a relationship with the client is expected to make any necessary contact.

Lunch Keynote Speaker

Kathleen Quinn, Executive Director, National Adult Protective Services Association (NAPSA)

Kathleen Quinn stated that, five years ago, if someone told her the financial services industry would be taking “such an in-depth and widespread interest” in senior financial abuse, it would have been her dream and that she “never thought it would happen.”  She commended SIFMA, FINRA, the SEC, and every other agency working to address such a “huge issue.”

Quinn stressed that due to the lack of federal action to protect seniors, adult protective services (APS) programs lack consistency, and said there is a lack of awareness surrounding vulnerable adults and senior abuse. She added that there is a “dearth of research” and “untold amounts” of impoverishment, suffering, and death among seniors due to exploitation.

Quinn noted that some of the challenges for APS organizations in working with financial institutions are the lack of training and awareness of how to handle, and where to report, securities fraud.  She stressed the need for more coordination between the financial services industry, APS, and regulators, and noted that the biggest challenge for APS is that financial institutions often refuse to release records during investigations, adding that “we are protecting people’s privacy at the expense of protecting people.”  Quinn expressed her interest in conducting a roundtable with SIFMA and other organizations in the industry to work through privacy issues.

Quinn described the National Adult Maltreatment Reporting System (NAMRS) that is able to document the number of reports APS receives, types of abuse, who reports the abuse, what is known about perpetrators, and how APS responds, adding that 10 states received awards to implement the system.  She further explained that NAPSA has created the National Institute on Elder Financial Exploitation (NIEFE), which will bring increased awareness and additional funding to APS/NAPSA and will act as a clearinghouse, adding that NAPSA’s financial exploitation advisory board will oversee the institute.

Panel 3: Communicating with Clients on Diminished Capacity Matters

Getting Ahead

When asked how firms can “get ahead” when it comes to communicating with clients regarding diminished capacity, Emily Boothroyd from Westport Resources stressed the need to work with families while the situation is “light” so guidance can be given early on. Barton Close from Raymond James noted the importance of finding out if dementia is in a client’s family history.  Amy Daniels from Edward Jones stated that advisors need to understand their clients and their client’s family in depth, and find out how the advisor can protect the client’s values.

Deborah Juran from RBC Wealth Management echoed other panelists, adding that “without knowing your client, how do you determine what’s appropriate?” Rocco Papandrea agreed with Boothroyd, stating that advisors should help educate their clients on potential issues they may face in the future.

Trigger Points

Boothroyd noted that sometimes elder law is not a “clear cut case” and that all employees need to be engaged from an early point, stressing the need to “get to know” the family dynamic.

Juran highlighted a workbook she developed, which asks the client to provide information, including the name of their accountant and legal team, the types of accounts they own, and other relevant information.  She noted that when dealing with clients that have diminished capacity, they sometimes are not as engaged or available as they have been previously, so it is important to have the information early.  Juran stressed the importance of following up with estate attorneys when multiple powers of attorney are presented.

Close stated that his customer relationship management network links individuals to family members so other team members can easily identify the other people in their client’s lives, as well as communicate with other family members with the client’s permission. He added that his firm brings estate planners in to speak with advisors to explain the estate planning process, and that advisors need to know more about the aging process so they can be aware of the signs and know the “right things to say.”

Robo Advice

Boothroyd noted that “robos” can advise, but cannot plan, adding that there is “no way” they will replace human contact.  She explained that using processes does not “dehumanize” the practice, but can “leverage and enhance it.”

Close stated that the market will necessitate advisors to continue to separate what is provided to low and high net worth clients, explaining that in-depth relationship management leaves “less time” for smaller clients, and that “robos” may “take up some of the slack” where less advice is needed.

Juran stressed that advisors are “irreplaceable,” as robo advisors cannot replace the experience advisors have. 

Panel 4: Legal and Compliance

Legal and Compliance Structures

Each of the panelists described their firm’s Legal and Compliance structure as it pertains to senior investor issues, with common approaches in the escalation of concerns to a previously designated team, though specific procedures varied depending upon business model.  Panelists were also provided with three financial exploitation scenarios and subsequently explained how such a scenario would be addressed within their firm’s structure.

During the discussion on individual firm structures, Tom Mierswa of Morgan Stanley highlighted the importance of privacy concerns when dealing with financial exploitation issues, and referred to interagency guidance that was issued to explain exemptions to firm privacy obligations in cases of suspected fraud.  During this discussion, panelists were also asked whether their firms still had any compliance issues related to senior designation rules; all panelists replied in the negative.

Mandatory Reporting

Panelists also discussed the differences in their firm’s procedures in states with mandatory reporting vs. voluntary reporting.  Amanda Demas of Chase Wealth Management explained that, in mandatory reporting jurisdictions, as soon as a possible issue is escalated to the appropriate team, her firm provides an immediate report to the appropriate APS organization.  Conversely, in voluntary reporting jurisdictions, the escalation team will initiate an investigation into the case of suspected financial exploitation or diminished capacity and will make a report once the firm is reasonably confident that the situation is exploitative.  Demas further noted that the firm has made roughly eight thousand APS reports over a relatively recent time period, and that mandatory reporting can be costly and burdensome for APS organizations.

Mierswa seconded Demas’ comments and noted that, in voluntary reporting jurisdictions, Morgan Stanley will wait for the facts to develop and then follow their internal protocols and work with their AML unit for an internal review before a “flag” is triggered.  Both Chris Majeski of Merrill Lynch and Melissa Shea of Fidelity emphasized that they too reported in all jurisdictions – both voluntary and mandatory.

Panelists also discussed a rise in escalated transactions after firm training programs were put in place and Majeski stated that their firm had experienced a steady increase in escalations after their ongoing training programs were implemented.


Panelists also addressed the senior investor protection proposals that were discussed during the earlier Regulatory Panel.  Mierswa noted that there were a “good number” of situations involving abuse of ACATS, and explained that the initial receipt of an ACATS form can be the red flag in many situations.  However, in those cases, the investigation would occur too late to prevent the transfer and he noted that privacy concerns often prevent the sending firm from notifying the receiving firm of the suspected exploitation. 


Shea stated that no matter the actions taken by the financial institution, there is a high likelihood of a lawsuit.  As such, the only thing a firm can do in this space is to attempt to “do best by the client.”  She emphasized the importance of effective internal procedures and ensuring that staff members are sufficiently trained to establish and follow said procedures.  She subsequently emphasized that, in arbitration, the most difficult cases to defend generally include red flags that were not acted upon, such as an 85 year old client that sounds like a 30 year old on the phone.

Senior Investor Protection Proposals

Panelists also raised a number of issues with the NASAA and FINRA proposals discussed during the regulatory panel.  These issues included the unreasonably short, defined time frame in which only firms (and not regulators) must perform an investigation, the lack of protections when firms act in their client’s best interest, discrepancies in the age of covered individuals in the different proposals, and the focus of the proposals on “disbursements,” as opposed to “transactions,” which encompass a broader universe of detrimental actions (for example, if firms are only allowed to delay disbursements, they would still be required to execute an exploitative ‘sell’ order and would only be able to stop the liquidated funds from leaving the account).

An additional concern was raised regarding the fact that requiring a court order to extend a hold could subject an individual to greater abuse by making the suspicion (and potential senior vulnerability) public.  Overall, panelists emphasized that each case of financial exploitation is different and each unique set of facts requires a different approach, but that the initial NASAA and FINRA proposals may be too strict to allow for the necessary flexibility.

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