Tax Pros Can Help Elderly With More Financial Education to Prevent Fraud

helping seniors finances

Accountants and tax preparers could play a bigger part in helping regulators to educate investors and the elderly with the implementation of a program by the North American Securities Administrators Association (NASAA), following a recent poll that indicated a rise in fraud.

A survey by the NASAA showed that 97 percent of respondents believe there’s greater awareness of seniors’ financial exploitation this year compared to 2016.

At the same time, 29 percent have seen an increase in fraud and exploitation cases, while 69 percent say the number is about the same.

Education is key. Accountants and tax professionals play vital roles in educating consumers about money matters. And while these professionals may not be the first to see this particular type of fraud, they surely will deal with its backlash.

“The NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation Enforcement” — approved by NASAA in January 2016 — is being rolled out to protect vulnerable adults from financial exploitation. States that have passed it or similar legislation and regulations include Alabama, Arkansas, Delaware, Indiana, Louisiana, Maryland, Mississippi, Montana, New Mexico, North Dakota, Texas, Vermont and Washington.

As of May 1, this year, legislation or regulations similar to the model act were introduced in Alaska, Colorado, Kentucky, Michigan, Minnesota, New York and Oregon.

The overwhelming majority of respondents in the recent survey said most cases of exploitation and senior fraud are detected too late to help. And the majority (75 percent) of the respondents said investment advisors and broker-dealers aren’t doing enough to stop the fraud, while 25 percent said they are.

“It is imperative that we detect and prevent senior financial fraud before criminals who prey on our most vulnerable citizens steal from and devastate them,” said NASAA President and Minnesota Commissioner of Commerce Mike Rothman, in a statement. “The clear message from our NASAA members, who are the securities regulators on the front lines, is that we need everyone to step up and apply greater resources to stop financial fraud against seniors.”

A key tactic to thwart the crooks is stopping the distribution of funds, with 77 percent of respondents saying that’s been their course of action while 23 percent said they haven’t done so.

The number of regulators who have implemented the model act is about evenly split, with 48 percent saying they have and 52 percent saying they haven’t.

Still, the majority of respondents reported that they have received reports of senior exploitation since the act was adopted.

So who are these victims? The majority (82 percent) of respondents said the so-called “silent generation” of World War II-era pre-boomers are the most vulnerable, while 18 percent pointed to the baby boomer generation. Interestingly, Generation X and millennials aren’t considered vulnerable to fraud at all.

In June, another NASAA survey shed more light on the issues.

Of the more than 60 broker-dealer firms that participated in the survey, more than half (54 percent) of the responding firms lacked a formal policy defining senior customers. And less than half (41 percent) had developed a form for customers to identify an emergency or trusted contact person. Yet 90 percent have either a dedicated team or some internal process for addressing senior issues and 95 percent offer training on signs of abuse.

Still, the broker-dealer firms included in that report reported nearly 2,300 cases concerning possible financial abuse or exploitation of seniors to outside authorities in 2015.

The NASAA survey was based on 36 regulators from NASAA member organizations of 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.


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