Tuesday, Jun 27, 2017

Global Financial Planning Community Sees Client-First Duty of Care as Best Way to Protect Elders Seeking Financial Advice

DENVER, CO – 27 JUNE 2017 – Financial Planning Standards Board Ltd. (FPSB), the global standards-setting body for financial planning and owner of the international CERTIFIED FINANCIAL PLANNER certification program outside the United States, has submitted survey responses from more than 2,600 CFP professionals in 12 territories to the International Organization of Securities Commissions (IOSCO) on the subject of senior investor vulnerability. FPSB’s feedback is the result of a request for input from an IOSCO committee studying financial fraud and abuse risks for senior investors.

FPSB’s survey sought to compare risks to senior investors (defined as those in or nearing retirement) compared to other investors in multiple jurisdictions; whether laws, regulations or programs are in place to protect seniors; whether financial planning and financial services firms have created programs or policies to deal specifically with providing financial advice or other services to seniors; whether practitioners have encountered clients who have been victims of fraud or financial abuse; and what measures would most benefit seniors if introduced in a jurisdiction.

Responses to the survey included the following themes:

  • The majority of respondents (60%) felt seniors would benefit most if regulators and professional bodies encouraged policies that support the delivery of financial advice to seniors under a client first/best interest duty of care.
  • More than one quarter (27%) of respondents said they had encountered a client within the last 12 months who was the victim of fraud or had been taken advantage of as a result of being a senior.
  • While financial planners believe seniors are at greater risk of losing money to fraud, or of being taken advantage of, our respondents found it difficult to carve out seniors from any other type of investor who may be inexperienced or have reduced or impaired mental capacity. Our survey participants, however, did identify specific situations in which they felt seniors could be at risk.
  • Most respondents indicated there were laws, regulations or programs in place to protect seniors accessing financial services in their jurisdictions, but they added that in most cases, the laws, regulations or programs were designed to protect all investors, not just seniors.
  • Stealing, “get rich quick” schemes and mis-selling were cited most often as tactics used in elder financial abuse situations.
  • While many respondents said they had created programs or policies to deal specifically with providing financial advice or financial services to seniors, the majority indicated they had no such programs or policies in place.

“CFP professionals told us they could envision a variety of scenarios in which senior citizens could be at risk, including placing “blind” trust in a family member or adviser, responding to aggressive sales tactics, isolation, a lack of financial or technology education, or pressure from family members,” said Noel Maye, FPSB CEO. “These issues are especially concerning, given seniors’ short time horizon to make up for losses in their hard-earned savings. We hope the feedback from our global network of financial planning practitioners is useful to IOSCO as it evaluates courses of action for regulatory bodies in this area.”

Maye added that the global financial planning community remains committed to supporting programs for financial literacy and financial education for all consumers, and that many of the survey comments reflected practitioners’ desire to help seniors and their families improve their financial knowledge. FPSB and its member organizations plan to participate in IOSCO’s World Investor Week, 2-8 October 2017, with the FPSB network hosting a Global Financial Planning Day on Wednesday, 4 October 2017, to raise awareness about the importance of investor education and protection, and to highlight initiatives in this area.

FPSB’s complete response to IOSCO is available here.

About FPSB

FPSB manages, develops and operates certification, education and related programs for financial planning organizations to benefit the global community by establishing, upholding and promoting worldwide professional standards in financial planning. FPSB demonstrates its commitment to excellence with the marks of professional distinction – CFP, CERTIFIED FINANCIAL PLANNER and CFP Logo mark – which it owns outside the United States. FPSB has a nonprofit member organization in the following 26 territories: Australia, Austria, Brazil, Canada, Chinese Taipei, Colombia, France, Germany, Hong Kong, India, Indonesia, Ireland, Israel, Japan, Malaysia, New Zealand, the Netherlands, the People’s Republic of China, the Republic of Korea, Singapore, South Africa, Switzerland, Thailand, Turkey, the United Kingdom and the United States. At the end of 2016, there were 170,101 CFP professionals worldwide. For more, visit fpsb.org.

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