Promising Practices for Financial Professionals Who Work with Older Adults Opening Remarks: JULIE SCHOEN, Deputy Director NCEA Guest Panelists: KATE KRAMER, Policy Analyst, CFPB, Office for Older Americans DENISE DIODATO, Principal Analyst, FINRA, Securities Helpline for Seniors MELANIE SENTER LUBIN, NASAA President, Maryland's Security Commissioner SUZANNE MCGOVERN, Senior Advisor, U.S. Securities and Exchange Commission SARAH MYSIEWICZ, AARP, Government Affairs Division JILENNE GUNTHER, Director, AARP, BankSafe Moderator: JULIE SCHOEN, Deputy Director NCEA June 9, 2022 JULIE SCHOEN: [In progress]—working on this very important topic on how we can provide privacy practices to all of you who are working with older adults in the financial industry. If we could go to the next slide, I believe there is a disclaimer. Here we go. We always have these before we begin a webinar. That's it, and if we can go to the next slide. So I'm Julie Schoen. I'm the Deputy Director of the National Center on Elder Abuse. We are a resource center that is funded by the Administration on Community Living, one of 26 of their resource centers that they provide, and it comes to us through a grant to the Keck School of Medicine at USC. When you go to our website, which I'm really hoping you do, following this presentation, we provide all resources on all types of elder abuse. Although today's focus is on financial, if you need any assistance with physical, sexual, or emotional neglect, we are here for you to find you those resources. This is what our website looks like when you come to visit us, and we don't want you to reinvent anything. We are here to support you and to help you as you join in the support and social justice movement. With that, I would like to have each of the panelists introduce themselves. We'll start with you, Kate, at CFPB. KATE KRAMER: Thank you so much, Julie. I'm Kate Kramer, and I'm a Policy Analyst with CFPB's Office for Older Americans. The CFPB is a federal agency. Our mission is to help consumer finance markets work by making rules more effective by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. Our Office for Older Americans focuses on working to help protect older consumers from financial harm, and to help people make sound financial decisions as they grow older. Many of our resources are targeted towards people, age 62 and older, as well as financial caregivers and financial institutions and other professionals. We work to empower intermediaries like banks and credit unions to better serve older adults and to help prevent elder fraud. I will pass it over to Denise. DENISE DIODATO: Thank you. My name is Denise Diodato. I am the Principal Analyst on the FINRA Securities Helpline for Seniors. FINRA is a not-for-profit organization that oversees United States broker dealers by protecting investors and ensuring market integrity. We oversee more than 624,000 brokers across the country and analyze billions of daily market events. Our commitment to our mission is embedded in everything we do, along with a strong sense of our values, collaboration, expertise, innovation, and responsibility. They not only reflect who we are as an organization but what we strive for, one team acting with one vision to achieve our public service mission. New rules are generated from various sources, including FINRA firms, investors, analysis of data and trends, recommendations from the FCC, and responses to market developments. FINRA examinations are initiated for various reasons including for cause, examinations triggered by complaints, a disclosure on a financial professional's Form U4 or U5, arbitrations, market regulation, trading, and market-making exams. FINRA surveils the markets for suspicious activities such as manipulation and other types of fraud. Our investor education foundation supports innovative research, educational resource information, and tools. It is listed on our FINRA website, finra.org. Finally, our FINRA Securities Helpline for Seniors. Both seniors and vulnerable adult investors, their family members, friends, and registered representatives have access to specially trained FINRA staff who can assist with questions and concerns about their brokerage accounts and investments. Thank you. I'll now pass it off to Melanie. MELANIE SENTER LUBIN: Thank you, Denise, for handing it over to me. I want to thank you, on behalf of NASAA, the National Center of Elder Abuse and the CFPB, for inviting us to participate in today's important discussion. My name is Melanie Lubin. I have the privilege of serving as this year's NASAA President, and I'm also Maryland's Security Commissioner. As our listeners may know, NASAA is the oldest international organization devoted to investor protection. Today, our membership consists of the securities administrators in the 50 states, the District of Columbia, Canada, Mexico, Puerto Rico, and the U.S. Virgin Islands. We have a corporate office located in Washington, D.C. State securities regulators like me have long worked through and with NASAA and other regulatory and industry partners to protect older investors from financial exploitation. We're essentially the local cops on the beat in the securities and investment space. I look forward to saying a bit more about that later on in today's seminar. I would like to turn the mic over now to Suzanne. SUZANNE MCGOVERN: Thank you, Melanie. As a government agent, I do have a disclaimer. These comments are my own and not representative of the commission, the commissioners, the chairman, or any of the SEC staff, and it should not be considered as legal interpretation or advice. I know everybody on this call knows about the U.S. Securities and Exchange Commission. Our mission, we inform and protect investors. We facilitate capital formation. We enforce the Federal Securities laws. We regulate the securities markets, and we provide data. We do that through our headquarters, here in Washington, D.C., and our major divisions. Corp Fin reviews filings of 7,600 reporting companies. TM and IM write the rules for both broker dealers and investment advisors in mutual funds. The exams program examines 3,700 broker dealers, 155,000 branch offices, 24 exchanges, 14,000 investment advisors, 800 mutual funds, municipal advisors, transfer agents, credit rating agencies, and SROs, but we also work very closely with our SROs, like FINRA, on the phone today. Our enforcement division is busy trying to stop the bad actors that are still out there with $3.8 billion that we recovered for investors in 2021 and $564 million to whistle blowers who brought us information to stop the bad behavior. Then there's our Economic Risk Analysis division who does all those numbers that we provide. We have 11 regional offices on top of that, and we keep busy with not very many folks. So very happy to be here today with this great panel. SARAH MYSIEWICZ: Great. Thanks. Kate, I think it's my turn to set the stage, is that right? KATE KRAMER: Yes, you're right. SARAH MYSIEWICZ: All right, great. Let's go ahead and move on. My name is Sarah Mysiewicz. I am in AARP's Government Affairs Division. Before I do this stage setting, I also want to introduce you to my colleague who is on the line, Jilenne Gunther. Jilenne, are you there? JILENNE GUNTHER: I am. Thank you, Sarah. I am the Director at AARP. I run our BankSafe program. It is a B2B program where we look at how we can work with the financial industry to better meet the needs of older adults. With that team, we create a variety of different resources that are free to banks, credit unions, investment firms, and even retailers selling financial products. With those resources and our training that we put together, our team has stopped over $100 million from the accounts of older adults. Back to you, Sarah. SARA MYSIEWICZ: Thanks, Jilenne. She's going to talk a lot more about that during the panel discussion, but I wanted to kind of give an overview on where we are with fraud and what we see going on in the industry and in the space. For those of you who don't know, AARP is an association that represents more than 38 million, 50-plus. We really focus on a lot of things, but one in particular is making sure that people can live independently as they age. Obviously, that includes accumulating retirement wealth, but also making sure that people can keep it and don't get defrauded. That's getting harder and harder to do these days. Scams are on the rise across the U.S. Last year, $5.9 million in consumer losses were reported to the SEC, but actual losses could be as high as $56 billion. We have a long history of fighting for protections for older Americans. This includes legislative and regulatory advocacy at both the state and federal level. It includes direct work with consumers and those impacted by fraud, and as Jilenne mentioned, outreach to the industry regarding best practices. The AARP is laser focused on providing a voice to consumer concerns. That includes helping to shape the public discussion on fraud. That's why we created the Fraud Watch Network whose mission is to educate older adults about the risk that fraud represents to financial security. We also offer support to people who have experienced fraud, through our toll-free hotline and through online support sessions to help victims recover emotionally from their fraud encounter. Just to give you a little flavor of what that looks like, we had 97,000 consumers call into the Fraud Watch Network last year. This year, those numbers are even higher. We're looking at roughly 10,000 calls per month, relating to fraud. The Fraud Watch team is currently engaged in a 2-year campaign. One is to stop the use of gift cards and fraud, and the other is really to lead a national effort to fundamentally transform how the country addresses consumer fraud. Part of that is really shifting the narrative, and that's why this panel is so important today, because we want to make sure that we're not talking about—we're not giving voice to the shame that victims feel. Instead, we're really shifting it to culpability of criminals One more quick note before I hand it back over. There were several recent wins in Congress relating to fraud. I just want to make sure folks are aware of these. Notably, the AARP supported the bipartisan Fraud and Scam Reduction Act, which was signed into law last year. This act will improve the SEC's prevention and response efforts against senior fraud and scams. It's going to do this through enhanced coordination with key industries, consumer advocacy groups, appropriate law enforcement agencies, and consumers. The act creates the Senior Scams Prevention Advisor Group and an advisory office. The advisory group will create educational materials that may be used by retailers, financial services, and wire transfer companies as a guide to prevent scams that target seniors. These materials will also be used to educate seniors' families and caregivers on how and where to report fraud, which we know, as per the Fraud Watch Network, is a key part of keeping up with scammers and educating the public on what to avoid. Additionally, the new Senior Fraud Advisory Office will advise the FTC about the prevention of fraud targeting seniors. This will include monitoring the market for mail, television, internet, telemarketing, and robocalls. Finally, just a last word; we are thrilled to be here today, and we're also working with other agencies on this call, including the SEC, FINRA, NASAA, and others. For example, the SEC just recently held a roundtable in April to talk about the 50-plus investor and what their unique concerns look like. The AARP called on the SEC to establish an interagency working group on older adults there, and to work across various internal divisions to promote issues and policies regarding older results, specifically focusing on affinity and social media fraud. We're also encouraging plan enforcement action in order to aim at multiple investment scammers in a way that, again, highlights the culpability of criminals, not the actions of the victims. We're looking forward to continuing this conversation with all of the agencies and all the folks on the phone. We just look forward to the conversation. Thanks so much. JULIE SCHOEN: Thank you, and thanks to all of our panelists for being here today. This is just amazing. The objective, of course, is to provide all of you in the financial industry with the expertise that is here in the room. The NCEA, of course, is tasked with improving the national response to elder abuse in all the forms it takes, but we rely on all these people here to help us because we have a helpline, we respond to emails, and social media inquiries. It is our job to get people connected to all of these great resources. We want to share all that information with all of you today. Now, when putting this together, we thought, what do we want to do? We want to really answer some of the questions that have come to us. We've organized those accordingly, and we're going to give all our panelists an opportunity to share their expertise. And so what I'd like to start out doing is having everybody respond, but one of the first questions we're going to address is: What are some of the common practices that you employ when working with older adults? As an agency, what have you developed that you find is very effective? I think what will be easiest to do is just go through kind of the lineup that we started with. I think we'll start with the AARP, and we'll work our way alphabetically down the line. Sarah and Jilenne, would you like to take this on first? JILENNE GUNTHER: Yeah, absolutely. Some of the common promising practices that we see to better help older adults, let me just share a few. I think one of the simplest ones is really looking at slowing it down, taking an interest in older customers. We know that four in five older adults bank in a branch, one and three know their customer. And so taking those few moments to really engage, not only as good customer service and building trust and connection, but it also helps identify things that are out of the ordinary, in terms of patterns. Of course, education on the frontlines is really critically important. One of the things that we've seen, in terms of the research, is that one out of two times that someone intervenes in an attempted exploitation, they're able to stop it. Really empowering your employees with resources, tools, and the confidence they need to really effectively spot it—and then stop it—is critical. We've also worked with Virginia Tech. They examined the risk mitigation factors within the financial industry to figure out which ones are the most effective to stop financial exploitation. What they found through their research, with over 100 different financial institutions participating, is that freezing, holding, and delaying transactions is far and away the most effective practice. Let me say that again, freezing, holding, and delaying transactions. The other two most effective steps they found in their research was documenting account notes as well as asking those questions. One of the things that we know, as we've talked to financial institutions and those who are on the frontlines, is that intervening can be intimidating. We've developed a library of resources at AARP that frontline employees can use to help support their interventions. One of the things is, we have training, and that training has proven to actually save money. That's the over $100 million I mentioned earlier that has been stopped from ever leaving the accounts of older adults. But you can find all of our insights and our resources by visiting aarp.org/banksafe. JULIE SCHOEN: Excellent. Thank you so much, Jilenne. Kate, how about you and all those great materials at CFPB? KATE KRAMER: Thanks, Julie. Well, in 2016, we released an Advisory and Recommendations for financial institutions that was focused on preventing and responding to elder financial exploitation. If you haven't seen that yet, I just wanted to mention it, but it has a variety of different promising practices that financial institutions can implement to help you better prevent elder financial abuse and to intervene when you do recognize it. A couple examples of some age-friendly practices that we see and think are very beneficial, includes things like banks asking their customers to identify a trusted contact person that staff can then alert if they suspect elder financial exploitation, banks following state law to place holds on transactions or delay disbursements—just as Julie mentioned, when they suspect elder finance exploitation—and also banks reporting suspected financial abuse in a really timely and thorough manner to authorities, like Adult Protective Services or law enforcement, who can then follow up to either provide services to the elder fraud survivor or to identify and prosecute the bad actor. In addition, there are age-friendly innovations that we see, like protective financial technology, things like automatic alerts, financial management applications that help someone to monitor or may help a financial caregiver to assist with monitoring finances, as well as personalized reminders and alerts that really help people to know if there are transactions happening that they didn't make themselves. These types of interventions we see can help prevent financial exploitation and can also decrease the fraud losses that are sustained by older adults if there's an ongoing situation. Our recommendations, along with a ton of other free resources that we have for financial institutions and financial resources for consumers, are going to be included in the resource list for this webinar and also our website. Please take a look at those. JULIE SCHOEN: Thank you, Kate. Denise, what strategies does FINRA deploy? KATE KRAMER: Sure. FINRA encourages firms to review—and where warranted—enhance their policies, procedures, and practices. Firms' procedures and controls should take into consideration, for example, the age and the life stage of their customer, whether they're pre-, semi- or fully retired; suitability recommendations to senior investors; communications targeting older investors; potential abusive or unscrupulous sales practices or fraudulent activity attacking senior investors; discussing successor planning with reps that are ready to retire, and what will happen to their book of business; training on financial exploitation and diminished capacity red flags; implementing a comprehensive escalation process; and creating a dedicated senior staff team or dedicated staff in either compliance and/or legal departments. Thank you. JULIE SCHOEN: Thank you so much. Very good. Melanie, how about you? What is happening at NASAA? MELANIE LUBIN: We support a lot of things that are going on, particularly things that are going on with FINRA and the SEC with report-and-holds and those kinds of movements. But the most promising thing I've seen is that the industry appears genuinely committed to working in good faith with the government to continue to move the needle on preventing senior financial exploitation. I've been a securities regulator for more than 35 years, and if I have learned anything, I've learned that it really takes a village to protect investors and particularly older investors. At NASAA, we've been engaging regularly with the industry and their legal and compliance representatives on ways to better protect older investors. In fact, I attended a meeting yesterday where state and federal regulators and industry representatives discussed emerging and enduring topics related to the prevention of potential senior financial exploitation. All that being said, unfortunately, state securities regulators continue to see a lot of opportunity for improvement by financial professionals in their efforts to learn how to prevent financial exploitation, and we understand these can be difficult conversations to have. I mean, we frequently get reports, we get on the phone with investors, and then we're trying to convince investors that they ought to pay attention to us, more than the person that's trying to defraud them. It's really often an uphill battle. If any of the listeners haven't done so yet, please check out the training presentation that NASAA, the SEC, and FINRA prepared as a service to the securities industry. It's available on NASAA's website at nasaa.org. It's N-A-S-A-A. We have an extra A; we're not the space people. It's nasaa.org. It's also on the resource list. Firms can use this presentation to train their associated persons about how to detect, prevent, and report financial exploitation of older investors. For other resources, you can contact your state securities regulators. You can also go to the NASAA website. There will be a link that says, "Find your Regulator," to learn about the other resources we have locally, and other guidance, because we're involved with different teams and groups that live in our states and have a lot of resources that we can refer people to when there are issues that come up. Again, take a look at nasaa.org, both for that training, and also to figure out how to get in touch with any one of us. JULIE SCHOEN: Thank you. I think that's a perfect segue into you, Suzanne, at the SEC. SUZANNE MCGOVERN: Thank you. I've been working on senior issues since 2006. On sec.gov, there is a white paper—a couple of white papers on good practices we have seen along the way. What we did see, number one—and I agree with my fellow panelists—the industry is very engaged in this. Look and see what your firm is doing. I've seen, out there, different firms' heightened supervision on certain products to be sold to seniors, like options, annuities, or exchanges. Everybody takes a pause before the order goes in. That training, red flags, for sales assistants and frontline folks—to notice patterns changing or behavior changing—that gives them concern, but they don't really know what to do. The other thing is the firms that had escalation processes. When those frontline people saw something that gave them some concern, they had somewhere to go, like the senior specialists that my FINRA colleague just talked about, or even somebody in the legal department for some of these smaller firms. Who can you bounce some of these by, to see if what you're thinking is in fact problematic? The other thing I will say is we did a review of some SARs a few years back. One of the things we saw was family members were the people abusing the seniors. You have to really pay attention to the actual activity. Did something change automatically? Money is going out that had never gone out before. Very different people with the senior now. All those can be red flags. Those are good things to concentrate on to help to try and stop it before it happens. JULIE SCHOEN: Excellent. Thank you so much. I can tell you, in the chat, it's blowing up with everyone wanting a copy of Melanie's document, you mentioned, so I have to make sure we get that out. But Suzanne, you said something that I'd just like to reflect on, very quickly, about taking a pause. Because at the NCEA we often see that people don't take that pause with the older adults. We work a lot with law enforcement, and we see that a lot. We try to get them to look at the older adult, talk to them directly, look at them in the eye, and give them the respect we all want. Because let's face it, we're all aging, right, and we want to be treated with respect and dignity at all ages. We just want you to—something that's often talked about is talking to the older adult alone. If there is that person standing right over their shoulder or directing them to something—whether it be a family member or the contractor or somebody who is forcing them into a transaction—take them and talk to them, themselves, and then really listen to them. I'm sure more of that will come out as we go into the rest of this, but we're definitely going to hear about the concept of the trusted contact. And so this next question, we want you to define what the trusted contact is and how this practice works for broker dealers and investment advisors. We're going to start with FINRA, please. DENISE DIODATO: Sure. Firms are required to make a reasonable effort to obtain a trusted contact name and information for all new and existing accounts, collectively. A trusted contact requirement applies at the account level. A customer with one or more accounts can provide either a single trusted contact for all accounts, or different trusted contacts for different accounts. Asking a customer to provide the name and contact information of a trusted contact does constitute as a reasonable effort to obtain information and satisfied FINRA Rule 4512 requirements. However, if the customer declines to provide the information or fails to respond to the efforts to obtain the information, the firm still can open and maintain the customer's account. A trusted contact person, for example, is a family member, a friend, an attorney, an accountant, a third party that's authorized by the account holder, who would respect their privacy, and know how to handle the responsibility of being contacted by a financial firm in limited circumstances, such as if the firm is unable to get in touch with the customer. Confirm if there is someone acting as legal guardian or executor or trustee or power of attorney, if having health concerns, or maybe concerns about the account activity related to fraud or exploitation. We'll note that naming somebody a trusted contact does not give that person any authority to act on behalf of the account owner. It does not allow them to execute any transactions or make decisions on the account. Finally, a trusted contact can be added and changed at any time. Thank you. JULIE SCHOEN: Thank you so much. Melanie, would you like to comment also? MELANIE LUBIN: Just as far as everybody asking about how to get that information, on the resource page, there is a link to FINRA's version. There's also—we don’t have the link to the NASAA website. If we get a break, I'll type it in, but if you go to ”Industry Resources" on the NASAA website, under that, there's a tab for "Senior Issues," and you'll be able to link to the NASAA version of that information. As far as a trusted contact goes, I think one of the really big issues--and this was already mentioned—is people understanding that it's not a power of attorney. Just because people—you know, you ask someone who's got an account, people who have been autonomous their entire lives, they're very worried about somebody else getting control, and they need to understand that it really isn't a power of attorney. We found that trusted contacts are a really effective tool, but it's underutilized, which is one of the reasons that we've got this joint program going, to get people to recognize it and try and get clients to sign it. Ironically, but unfortunately, older adults, older investors are statistically the most likely to require the aid of a trusted contact, and they're the ones who are least likely to provide it. During NASAA's annual outreach to stakeholders, we found that clients thought the trusted third-party contact was a marketing device, and they didn't want to designate somebody else who was going to get spammed with a whole bunch of emails or contacts in order to become a client. I think it's important for people to understand that that's not the purpose of the trusted contact. We need the financial professionals to discuss how important that is, and to also say, hopefully, that they're not using that as another marketing device. Client conversations with real-life examples of why it's important and how to appoint a contact person are really important. If you can kind of have that conversation when somebody—you know, just in the course of having a conversation about everything else that is going on with account, it might not be so sensitive and might just be something that the person opening the account is willing to work on. I think that, looking at it like that, and working it in, and addressing some of the issues people have about opening it, like do they get control of the account? Are they going to be flooded with marketing materials? Explaining that neither of those things happens is really important. JULIE SCHOEN: Very good. Thank you so much. Suzanne, how about you? SUZANNE MCGOVERN: I think a good way for firms to look at this is that it's important for every account, every customer, every age. Start when they're early, if they don't have it, because then that sensitivity or the way just—you know, what Melanie was just talking about. You don't have to have a tough conversation when either dementia or a problem has already happened. That trusted contact is already on the account because you talked to the person. You got the person to do it at age 35. That's number one. Number two, I would also talk to them about why it's important. If you're out of town, and for some reason they can't contact you, or a hurricane went by, and something is happening, into one of the stocks on your account, and they need to get in touch with you, can they call the trusted contact to, number one, find out if you're okay, right? Every broker really is always concerned about their customers, too. If something is happening and they are concerned with a dementia issue or an elder abuse issue, they do have somewhere to go. Number three, just in a practical sense, different broker dealers have put this trusted contact right on the statement, so you see it on the first page of your statement. You see if it's filled out, or you see if it’s not filled out. Fantastic. They're also doing that on the internet when you log into your account, asking for it right away, so it is a great tool. Now, let me get to investment advisors. This rule, this FINRA rule, of course, as you all know, does not apply to investment advisors. Investment advisors that are registered with the SEC have the same kind of—I'm sorry, the investment—there's an IM No-Action letter that provides relief to mutual fund transfer agents, which covers direct at-fund accounts—or accounts held at the funds—that are serviced by the fund transfer agent. The FINRA rule applies to broker dealers and broker dealer intermediaries. If you want to see that No-Action letter, you can go to sec.gov. It's on the resource page in this presentation. We have seen some advisors trying to work with customers to get an emergency contact-type thing, but there is no rule that covers that. JULIE SCHOEN: Thank you, Suzanne. In the chat, people are asking about making sure to get all these great resources. Yes, I know that CFPB is working on an amazing source list, and yes, we should be providing all that for you. And then back to the trusted contact. I have to tell you, throughout my career, in lot of work with Medicare and Medicare supplements, long-term care insurance, there was always the forgetfulness clause in the long-term care insurance. That made such sense to me, that someone could designate a contact, should they forget to pay their premium, or their premium wasn't received, because you would hate to think that they could not access their long-term care insurance—just at a critical point when you might need it—because you forgot to pay the premium. So if you can contact that person and say, "Hey, is So-and-So all right," just as Suzanne was saying. It's very analogous to me, and it just seems very much like good common sense. That would take me to asking of CFPB and the AARP, what might be the same thing for banks and credit unions to draw from in trusted contact— MELANIE SENTER LUBIN: Julie, I'm sorry, I had some state stuff on the investment advisor side, if you don't mind, I could jump in. JULIE SCHOEN: Okay. Oh, no— MELANIE SENTER LUBIN: From the state point of view, we go out and do a lot of the things that other people discuss in relationship to our registrants, and those would be, among other people, the state investment advisors. We've seen progress in this space, and there is a lot of room for improvement. There are some investment advisors who incorporated the trusted contacts into their client relationships, but there's still a lot of work to be done. In our most recent coordinated state examinations suite, we observed that a lot of advisors lack or fail to have the right policies about requirements being done, and/or training materials to help their reps do it. Our investment advisors' section is taking a look at potential model rules for the state advisors in relationship to trusted contacts, but I've got to tell you, I worked on a very early version of this project, more than 10 years ago. We had interviewed a bunch of investment advisors, and at that point in time, there were investment advisors who would not take people on as new clients, unless they had a trusted contact. This is way before "trusted contact" was a buzzword that everybody was using. I think there's a lot of uptake in one part of the industry. It's something a little new and getting developed in another part of the industry. I think it really involves educating the advisors, but like a lot of things that people are reluctant to do, because they're like, "Oh, this is just a pain, and it's just another requirement I have to live with," I think once they have the experience of saying, "Wow, this would have been a lot easier to handle if I had a trusted contact," they're more inclined, through personal experience, to decide that they're going to incorporate that into their business practice. So smart people learn from other people's mistakes; wise people don't worry about the mistakes, and just prepare. I would suggest being prepared and go ahead and get the trusted contact, up front, even if it's not a mandatory regulatory requirement. JULIE SCHOEN: Thank you, Melanie. Yeah, so making it so much easier down the line. Thank you so much. I think we were talking about how this could be incorporated into credit unions and banks. KATE KRAMER: Yes, that's actually a pretty timely question because our office released a couple of new advisories in December, about trusted contact persons, in an effort to really take a look at how this practice might work for banks and credit unions. That project was actually driven largely by conversations that we had with banks and credit unions who were kind of exploring this topic. They were telling us they saw a need for more resources and more consumer education on this topic since it was new to many of them as well. I don't want to repeat the excellent overview of trusted contacts that several of my co-presenters just shared. I'll just say that the concept works pretty similarly for depository institutions. I really like to think of the trusted contact as an emergency financial contact, similar to how you might have an emergency medical contact, or an emergency contact listed with your employer. It's someone who your customer would trust to step in and help. Although banks and credit unions are not required to offer this option for consumers to select their trusted contact person, some are starting to offer it. As my fellow presenters noted, this is a way that you can really help your customers protect their financial well-being. I mentioned we had two advisories. The first is for financial institutions, and that has a bunch of volunteer recommendations about using alerts to trusted contacts. It has information about developing relevant policies and procedures, educating your account holders, educating and supporting your own staff. We hope that those recommendations will be helpful for banks or credit unions who do decide to implement this practice. We also have a second advisory designed for consumers, since we've heard also from banks and credit unions that people were saying, "What is this? We don't know too much about it yet." That advisory is a handout that you can order for free. It's designed to educate your customers about trusted contacts and to encourage them to take advantage of this, where it is offered by their credit union. These resources are included in the webinar resource list, which due to the overwhelming interest expressed in the chat, will be sent out, along with the PowerPoint slides, to all participants, and you'll be able to take a look at those, if you haven't seen them already. JULIE SCHOEN: Thank you, Kate. Jilenne, did you want to weigh in on this also? JILENEE GUNTHER: Yeah, of course. I wanted to take a step back, Julie. One of the great things that you said earlier was just about talking to that older adult alone, and I wanted to tie that into trusted contacts. Just before Memorial Day, I went up and met with one of the banks in the Northeast that had been using our BankSafe training. They told me about this story where someone came in, with an older adult, an older adult that they knew. The older adult was not providing eye contact, wasn't as gregarious as they usually were. The other person had their arm and was squeezing what appeared to be very tightly, and that frontline—and they were also speaking for that person. They saw those three red flags, and that's when that frontline worker, that teller, escalated it. They ended up separating those two people and talking to that older adult alone. They also pulled up the file and noticed, too, that they had a trusted contact on file, and were able to call that person. That person was then able to talk to that older adult, and that's when it makes the trusted contact form, so effective. One of the things that we see at AARP, and hear in these stories from the frontlines, that we incorporate into our BankSafe training, is that when you have an older adult, and they're hearing the theme, not only from their trusted loved one, but that's consistent from what they're hearing from their trained financial professional, that can be remarkably effective. In fact, in the Virginia Tech research that we did, they found that 50 percent of the time, when money was stopped from leaving the accounts, that frontline person had used that trusted contact form to reach out to that person. This makes sense, because the research also shows that people need to hear something three times before they're provoked to take action—or that it leaves an impression upon that older adult—because they're hearing it, not only from their banker, but they're hearing it from a trusted loved one as well. I think it becomes to kind of what my colleagues said before, this is so effective. How can we encourage our clients and our customers and our members to appoint that trusted contact? Because it's one thing to make that available, but it's another thing to actually use it. We know that doing this will better protect the client or customer, but it also helps support the banker firm when an incident happens so that it leaves an impression and provokes the older adult to take action. And so, this week, I actually met with the CEO of Canada Age. She was talking about some of the work they'd been doing in Canada, in the security industry, and some of their nonprofits. They did some social-behavioral research, looking at how you can increase the likelihood that a customer will appoint a trusted contact. They found a remarkable 23 percent increase of the likelihood someone would fill out a trusted contact form if the form had three things. The first thing the form should have is a statement about how much exploitation is out there. That's the "one in five older adults will experience financial exploitation in their lifetime." The second thing that the form should have to be effective, in terms of getting people to sign up, is a statement that people generally support the concept of a trusted contact. That put people's minds at ease, to actually sign up for one. Lastly, they also said it was an active choice to have one. Simply put, that's just a box that says, "Yes, I would like to appoint a trusted contact," or, "No, I would not like to have a trusted contact." One of the things that we do at AARP with the BankSafe program is that we provide, within our training platform, a variety of trusted contact form templates, among the library of resources available to financial institutions that use our BankSafe platform. JULIE SCHOEN: Yes, and if anyone has not used that, or been on that, I highly recommend that you go visit. Very well done. We have a question from Carrie, that ties in, that she says she's concerned about privacy laws and wants to know if there are any legal documents already available to banks and credit unions for these trusted contacts, signed off on or by the customers. I don't know if there are any other remarks to that. KATE KRAMER: I can speak to that, and then if anyone else wants to jump in, they can. I guess, just first off, I'm part of CFPB's Office for Older Americans, which is in consumer education. I'm not part of the supervisory or regulatory team, and so I can't necessarily speak directly to how banks should assess liability, and I can't speak on behalf of the bureau on these issues, but I do want to share some information that hopefully will be helpful to you. There is no regulation that specifically discusses trusted contacts for depository institutions, banks, and credit unions, although considering whether disclosures to trusted contact persons are consistent with, for example, the Gramm–Leach–Bliley Act might be informative for you and your legal team, as you're considering those privacy and liability issues. Our Office for Older Americans partnered with several other federal agencies, a few years back, to write a memo, jointly, that discussed privacy concerns under the Gramm–Leach–Bliley Act and other privacy laws as they related to elder financial exploitation and disclosing that. That may be interesting too, and I can pop that in the chat. But under GLBA, a financial institution must provide customers with notice of its privacy policies and practices and must not disclose nonpublic personal information about a consumer to nonaffiliated third parties, unless they provide certain information to the consumer, and the consumer doesn't elect to opt out of that disclosure. Of course, you'll need to assess the risks and liabilities involved in adopting any new practices, but it's just something to consider. I'll pop that other joint memo into the chat for you, in case that's helpful. JULIE SCHOEN: Very good. Anyone else want to weigh in on that? MELANIE SENTER LUBIN: I just wanted to mention that, under the—like the state banks and state credit union provisions, they had a lot of the buy-and-hold or sell-and-hold provisions before we even had it in the security space, so there are some state provisions that allow for that and allow for other contacts. It's not exactly the same thing as a trusted contact, but it is similar. I think, I would imagine that the banking regulators are moving in this space, moving to do this kind of stuff as well, the state banking regulators. JULIE SCHOEN: Very good. I'm just going through a few of the questions that have been coming up that tie into this subject. I think they're interested in some of the research that has gone on and trusted others, or trusted contacts, I'm sorry. Let's see, I just want to make sure we're not missing anything. All right, let's go into some of the others that we have already received. One of those would be, how can an investment professional contact you with further questions regarding trusted contacts? And that's for FINRA or SEC, so any advice on that? DENISE DIODATO: Yeah. Investment professionals can contact the Securities Helpline for Seniors at (844) 574-3577, and our office hours are from Monday through Friday, from 9 a.m. to 5 p.m., Eastern. SUZANNE MCGOVERN: For the SEC, there are a couple of places you can go. Our Training and Markets Division, Office of Chief Counsel works very closely with FINRA and their rules and is very well versed in this trusted contact rule. You can get that phone number right on sec.gov. The exam program also knows a lot about this. You can call them at (202) 551-6200. If you want to talk to IM about how it relates to investment advisors, their number is also on sec.gov. JULIE SCHOEN: Very good, and we have a good comment from Stephanie, also, just asking if there had been any research on getting trusted contact persons assigned for younger customers when they first open up an account. Why not just incorporate that in, so there isn't something—does anyone—I don't, I'm not familiar with any research on younger customers. Anyone have any input on that? Yeah, a very interesting research study, definitely. I think that would be—I can't think of anything off hand. SUZANNE MCGOVERN: As I said earlier, though, that's a very—a simpler conversation to have. JULIE SCHOEN: Yes, and— SUZANNE MCGOVERN: And then it's on the account, you know? JULIE SCHOEN: Absolutely. It's just a good practice, I think it was—who brought it up? That it's just like an emergency contact with the hospital, that you'd want to have, in case of an emergency. Very good. All right, then another—just going in a slightly different direction is, they wanted to know what impact has the pandemic had on financial exploitation, and what should the industry be doing to address those? I thought we'd address that first with Jilenne at AARP. JILENNE GUNTHER: Yeah, absolutely. I think what the pandemic has done is really compounded several risk factors of financial exploitation. For instance, if you just look at the social isolation, we've known for a while, it can make a person vulnerable. You think about the pandemic, and we all felt at some point in time, that social isolation, but this has been especially for older adults who are at higher risk. One of the most shocking—not surprising—trends from the pandemic is that there has been a doubling of exploitation by trusted individuals, trusted individuals like family members or friends who are exploiting those older adults. Let me say that again, a doubling of the amount of cases of financial exploitation where the perpetrator is a trusted individual. Another example that comes to mind, too, that also plays off of social isolation, is that people get romance scams, right? The person starts as a stranger, but they move into that trusted category. In 2021, we saw $550 million stolen from these types of emotional scams. That's five times as much, stolen through these scams, than in 2019. Another trend that we're seeing with the pandemic was a dramatic increase in the number of unreported cases, which we've known. There's an embarrassment factor, why people don’t want to report, but 88 percent of the cases involving trusted others are never reported, compared to 33 percent involving strangers. As we kind of look to that next frontier of how things will be different as a result of the pandemic, one of the things that we're looking at with the BankSafe AARP program is peer-to-peer payment services, like PayPal, Venmo, and Zelle. The use of these services skyrocketed during the pandemic, where 85 percent of older adults, over the age of 50, reported using these services, sometimes or frequently, and fraud there has increased 700 percent, 700 percent. And so when we're looking at how can we combat this increase, I think there are two answers. I feel like a broken record here, but I'll say it again, it's training, training, training. It's training to identify those behavioral cues, the red flags, the transactional red flags, and it's analytics. It's talking to those bank vendors that you already have. Maybe it's a Jack Henry, or it's an EverSafe, but it's looking at those analytics and figuring out, how can we better employ these analytics to figure out, spot, and stop some of these transactions that involve financial exploitation? JULIE SCHOEN: Absolutely. Does anyone else want to weigh in? I can just tell you that isolation is the number one risk factor of elder abuse in all forms. During the pandemic, when we were saying that we needed to be socially distanced, we really should have been physically distanced, and not socially. You need to stay socially connected, keeping in touch with loved ones, keeping in touch with—just making sure those relationships are intact, checking in. It's so helpful, so that when a stranger calls on the phone—or the person that is the abuser that they've become so dependent upon—they know that they have other outlets. They know that they have somewhere else to go, or to verify information. That's just something that we have definitely learned also. MELANIE SENTER LUBIN: Yeah, and I just want to kind of drive that point home because, pre-pandemic, isolation was always something that made investors ripe for the picking. I don't mean to be so colloquial, but they were made incredibly vulnerable. Just the added isolation of the pandemic, whether elderly people chose not to go out when they could have or went out less. Or they started to figure out, "How do I use technology to connect to the rest of the world?" It just made it so prevalent that people were being exploited. It just compounded what was going on, even before the pandemic, especially when it came to socialization, because that just seems to be the best way to get—to victimize somebody who is incredibly vulnerable to start with. JULIE SCHOEN: Absolutely, and so many older adults use banking as a social activity. They go to their banks, they know their teller, and they know—they were connected in that way, and they really lost that. I think that was a great reason we have seen so much of the fraud levels you raised, so high. Let's see. I'm checking the time here. We're getting—we just have a few minutes, a couple minutes left. I don't know if there are any last-minute comments that anybody wants to make, or a takeaway before I— DENISE DIODATO: I just want to add, Julie, that FINRA has issued Investor Insights regarding social isolation. I do agree with my fellow panelists here. In addition to the investment fraud insights, there's also a joint research study on our website, relating to loneliness and cognition of financial and healthcare decision-making in older persons. And finally, a regulator notice, 20-13, advising firms and their associated persons to be aware and take appropriate measures to address the increased risks and challenges presented during the pandemic, in addition to new scams, focusing on COVID. Previous scams may also find new life, such as the fraudsters adapting to and exploiting recent events and related vulnerabilities, especially to those related to the remote working environment. This can all be found on our website, on finra.org. JULIE SCHOEN: Excellent. Actually, I've learned so much today, I always do, and just getting this new network of connections and people and faces and resources, it's just been so very meaningful to me. I cannot thank Kate and Erin for inviting me to be moderating this panel today, because it's just been very informative for me too. I just get to have a minute here to talk about World Elder Abuse Awareness Day. It's next week, June 15th. Really, just knowing that it's there is such a boon to the social justice issue, getting people involved, because as I mentioned earlier, we're all aging, and we all want to age in a community that is free from abuse. We're all part of it. Ageism is one of the strangest "isms" because, hopefully, we're all going to get there, right? And so being united and standing against elder abuse is something that we can all get on board with. We have some very simple things to do, wearing purple just to show your unity. If you go to just the next slide, Robin, thank you, here is some of our contact information and our toolkit that we have, where we can bring everybody together. With that, I don't know, Kate is there anything else? I think we're at 1:00. KATE KRAMER: Thank you so much, Julie, and thank you so much to all of our fantastic presenters. I also learned a ton today, and I so appreciate all of your time in sharing this information. Just for participants' knowledge, we'll be sending out the PowerPoint slides and a resource list, afterwards. Hopefully, you'll get all the links that you need there. JULIE SCHOEN: Thank you everyone. ROBIN DIXON-JEFFERSON: This officially concludes our presentation. Thank you, everyone. Be safe. Have a great weekend. Kate, I'm just going to leave the site up for a few more minutes, while people are checking out, so that if there are any links or anything they want to copy down, they can pull. Okay. KATE KRAMER: Fantastic. Thank you, and thanks so much again, everyone who joined. JILENNE GUNTHER: Thanks so much, Kate, for organizing, and thanks, Julie, for doing a great job moderating. I appreciate it, everyone. ATTENDEE: Take Care. JILENNE GUNTHER: Bye. ATTENDEE: Have a great day. 31