Protecting Seniors from Financial Abuse: A Growing Concern
At NPF, one of our core missions is to raise awareness and advocate for the protection of seniors from financial abuse, particularly in the realm of investment and financial advising. Recent data from the 2024 CSA Investor Index paints a stark picture of the growing risks seniors face, particularly when it comes to financial exploitation by family members, caregivers, and, unfortunately, even financial advisors.
Key Statistics from the 2024 CSA Investor Index
The 2024 CSA Investor Index provides some eye-opening statistics that confirm our long-standing concerns about financial abuse targeting seniors. While third-party fraud remains a major issue, the report highlights that a significant portion of the financial risks seniors face comes from within their own families and care networks. Here are some highlights from the executive summary on page 8:
- Family and caregiver-related financial exploitation is a far larger problem than fraud perpetrated by external sources.
- The abuse of trust by family members and caregivers is growing, with many seniors unaware of the financial risks associated with these relationships.
While third-party fraud continues to make headlines, these statistics reveal that a substantial portion of financial exploitation is happening in environments where seniors should feel safest — within their own homes and families.
The Role of Financial Advisors in Senior Financial Abuse
Another troubling trend highlighted in the report is the disproportionate number of complaints involving financial advisors and seniors. According to the Ombudsman for Banking Services and Investments (OBSI), financial advisors are frequently named in complaints from senior clients, especially around issues like:
- Unsuitable investments that don’t match the client’s needs or risk tolerance.
- Account churning to generate excessive fees for the advisor.
- Unauthorized trading that puts the senior’s funds at unnecessary risk.
- Off-book sales, or the selling of products outside of the advisor’s regulated scope.
- Borrowing from clients, a practice that raises serious ethical and legal concerns.
These complaints paint a worrying picture of the financial advice sector, particularly when dealing with vulnerable or less financially sophisticated seniors. A few years ago, several advisory firms were sanctioned for double-billing practices, targeting seniors who were particularly vulnerable. In some cases, millions of dollars were involved. This type of exploitation is not only financially devastating but can also leave lasting emotional scars.
The Danger of Financial Advisors as Executors or Power of Attorney
One of the most concerning developments we’ve seen is the increasing number of financial advisors being named as beneficiaries, executors, or powers of attorney (POA) for senior clients. While these roles are often filled with the best of intentions, they can open the door to potential conflicts of interest and abuse. Advisors in these positions may have undue influence over a senior’s financial and personal decisions, leading to situations where the advisor’s interests are prioritized over those of the client.
Additionally, pre-signed blank forms continue to be a significant problem. These forms, often signed without the senior fully understanding what they are authorizing, create opportunities for advisors to make unauthorized changes to accounts, withdraw funds, or make trades that benefit the advisor, not the client.
The Need for Action and Transparency
As we look to address these issues, we believe that more transparency and accountability are crucial. Dealers and financial institutions should be required to provide statistics on interventions and results regarding senior investor protection. Without concrete evidence and facts, it’s difficult to create effective policies that can truly safeguard seniors. The current TCP (Targeted Consumer Protection) measures are a step in the right direction, but there is much more that needs to be done.
A Bigger Role for the Office of the Public Guardian?
There may be an opportunity to expand the role of the Office of the Public Guardian in protecting senior investors. This office could take on a more active role in monitoring and investigating cases of financial abuse, ensuring that seniors are protected from unscrupulous practices both within their families and in the financial sector.
Moving Forward
At NPF, we are committed to continuing our advocacy for stronger protections for senior investors. The financial abuse of seniors is an issue that requires immediate attention and action, and we hope that by sharing these insights, we can spark more conversations and push for meaningful change in the industry. Financial advisors, institutions, and policymakers must work together to create a safer financial environment for seniors — one where they can trust that their interests are being protected and that their financial security is in good hands.
Special thanks to Ken from Kenmar Associates for bringing these concerns to our attention and helping us better understand the critical need for senior investor protection.
