This is the first in a two-part series on the steps advisors and their dealers can take to protect senior clients and meet the new standards that focus on the vulnerability of senior clients. This column describes what you need to start doing to meet the standards; the next column, which will be published on Aug. 2, will drill down on the power of attorney (POA), one of the most challenging issues facing advisors who serve senior clients.
Securities commissions across Canada, self-regulatory organizations and investment industry trade groups are giving advisors and their dealers a clear message: Protect your senior clients. Specifically, these groups are preparing reports and articles while government agencies are posting information that regulators will use to set the standard required of advisors.
As a result, here are some of the steps advisors and their dealers need to take to ensure they meet the new stringent requirements:
1. Educate yourself. There’s no choice but to read as much as possible on the unique issues that senior clients face — and there’s no shortage of material available online. There are materials on signs of dementia; signs of vulnerable clients being taken advantage of by friends, family and strangers as well as the Ontario Ministry of the Attorney General’s publication on the Duties and Powers of a Guardians of Property.
There are also materials that the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada and the Investment Funds Industry of Canada recently published as part of seniors’ month in June geared toward helping senior clients that advisors, their supervisors and their dealers should read. Although there are 11 months that are not “seniors’ month,” we will be hearing more from the regulators on these issues year-round. So, don’t stop educating yourself.
2. Protecting senior clients must become a holistic effort. Regulators are taking seniors’ issues seriously and focusing on all levels at a dealer firm — from the advisors to the supervisors to head office — consider whether you are giving these issues the proper attention they deserve. In particular, advisors need to help the supervisors with their supervisory role and vice versa. If a problem is not caught, litigation and regulatory matters tarnish reputations at all levels of the dealer, specifically, as well as the investment industry, in general. Therefore, keep an eye out for other advisors who might not be handling seniors’ issues properly — or any client issue for that matter.
3. Ensure you have great paperwork when it comes to senior clients. Notes taken during all conversations are crucial if you want to prove that you took the necessary steps to obtain instructions to protect yourself and your senior clients. Remember that many court cases get to trial years after the senior client has passed away — and you’ll end up defending yourself against the beneficiaries. As a result, you need a paper trail that will stand up in court to prove that you had fulfilled your duties to your deceased client. One of the issues that arises frequently in litigation is the POA. So, always make sure you’re operating under a valid power of attorney document. (See my next column, to be published on Aug. 2, for more on this issue.)
4. Don’t hesitate to take issues up the ranks. I repeat this very frequently in my training programs for advisors on issues concerning seniors. The key role for advisors is to identify the problems and take any concerns to supervisors and head office as soon as you recognize the potential for seniors’ abuse or other problems. Head office can turn to outside counsel, who can provide legal advice, if dealing with issues for which it needs further expertise.
Although the safety of seniors and the issues that can present themselves are fraught with challenges, advisors are on the front lines dealing with these issues. In turn, regulators will be looking to you to identify abuses, identify problems and take them up the ranks at your dealer.