Background:

Elder financial exploitation has been recognized as the fastest growing category of elder abuse in most states, and has been defined by the SEC to include the illegal or improper use of an older adult’s funds, property, or assets.[1] The elderly may be particularly vulnerable to financial exploitation due to cognitive and physical changes that happen during the aging process that may result in diminished capacity.

 

Due to the very nature of financial exploitation, investment advisor representatives may become aware or suspect that a client may be a victim of exploitation. Due to Investment Advisors’ unique position in relation to their Client’s finances, Advisors can play a key role in identifying diminished capacity and financial exploitation, and in preventing harm to their Clients.

 

The following facts and circumstances may, either individually or under the totality of the circumstances, result in the development of reasonable cause to suspect or believe that a Client is experiencing diminished capacity.

 

• Inability to process simple concepts or decline in ability to do simple math problems, difficulty in understanding important aspects of their investment account, difficulty managing their checkbook, or confusion and loss of general knowledge that the client once understood or had.

• Erratic behavior by the Client, including: memory loss, difficulty speaking or communicating inability to appreciate or understand the consequences of decision; disorientation; or an uncharacteristically unkempt appearance.

• Impaired judgement regarding investments or money, including: making decisions that are inconsistent with client’s current goals or commitments; or failure to fulfill financial obligations.

• Uncharacteristic, sudden, or unexplained changes to Client’s financial plan and health, including: cash withdrawals or wire transfers; appearing with new and unknown associates; nervousness or anxiety; lack of knowledge regarding their financial status; and sudden changes to financial documents such as powers of attorney or account beneficiaries.

 

Policy:

 

Diminished Capacity

 

Valor Wealth Partners, LLC will obtain/request copies of Client’s Power of Attorney documents, to keep on file, as well as the current contact information for the Client’s Power of Attorney Agents. In addition, we will request that clients provide us with designated  trusted points of contact, so that if necessary, we can contact a trusted agent of the Client if concerns arise regarding the Client’s capacity. We will request that all clients, regardless of age or apparent capacity, provide a trusted point of contact at the beginning of the Client-Advisor relationship.

 

If, at any time, Advisor identifies any of the above listed facts, events, or situations, in which Advisor suspects that Client may be experiencing diminished capacity, Advisor will document said facts, events, or situations in writing. Advisor will consult with CCO regarding an appropriate route of action, which may include contacting the Client’s Power of Attorney or Designated Trusted Point of Contact. Advisor will not execute changes to Client’s accounts, until Advisor determines that the Client is competently able to request the change.

 

Financial Exploitation

 

Employee Training: Employees of Valor Wealth Partners, LLC will receive annual training in-house on how to (1) identify and report any suspected financial exploitation to the CCO of Valor Wealth Partners, LLC and to government officials or law enforcement authorities; and (2) discuss the importance of protecting the privacy of Clients and their integrity. The CCO shall keep written records of the date and content of each training, as well as the names of each Employee who engaged in the training.

 

Escalation of Suspected Elder Financial Exploitation: When an Employee observes or has a reasonable belief that a Client is being exploited financially, the Employee shall document in writing the following information:

 

• The name of the client,

• The date the employee observed or learned of the issue,

• A description of the issue and parties involved, and

• Any relevant documents that the employee may have detailing the issue.

 

The Employee shall immediately meet with the CCO, or the appropriate delegated authority, and share the above information.

 

Mandatory Reporting of Elder Financial Exploitation: The Employee, in conjunction with the CCO, shall determine whether reasonable cause or actual knowledge exists to make a report of abuse, neglect, or exploitation.

 

When a Firm has reasonable cause to believe or suspect, or when actual knowledge exists that a Client has been exploited financially, or that exploitation is imminent, the Firm shall report the situation to the Executive Office of Elder Affairs (EOEA), Commonwealth of Massachusetts.

 

Reasonable cause to believe exists when the Employee has a subjective belief in the existence of the abuse, neglect, or financial exploitation, and that belief is objectively reasonable. This requires that the Firm must report these suspicions or allegations of abuse, neglect, and exploitation, when an Employee reasonably believes that it may have occurred or has been attempted.

 

In either case, whether or not reasonable cause exists, the Employee, with assistance from the CCO, shall document a description of steps taken in response to the facts or circumstances, including a detailed description of why or why not reasonable cause existed.

 

Frequency:

Diminished Capacity: Power of Attorney information and Trusted Point of Contact forms will be collected and executed during the onboarding of new clients. Additionally, the firm will annually consult with Client to see whether changes were made to the Power of Attorney documents or whether the Client would like to change their identified Trusted Point of Contact. Advisor will consult with the CCO on an as-needed basis regarding the competency of individual clients.

 

Financial Exploitation: Employees will receive training annually as required per the Senior Safe Act. Employees will consult with CCO regarding suspected elder exploitation on an as-needed basis. The Firm will report reasonable belief and actual knowledge of elder exploitation on an as-needed basis.

 

Responsibility:

CCO is responsible for ensuring that all team members understand and adhere to this requirement at all times. Every team member with exposure to clients needs to be familiar with this policy and procedure. All Employees shall follow the procedures and policies noted above.

 

Last Updated:

November 23, 2021

 

[1] https://www.sec.gov/files/elder-financial-exploitation.pdf