Dan Kahl, deputy director of the SEC’s Office of Compliance Inspections and Examinations, said when it comes to fees charged to seniors “we are very frequently finding problems—not necessarily a fraudulent area, but it’s lack of controls, lack of attention to your billing practices."

SEC was able to examine a record level of 17 percent of all advisor in 2018.  While the government shutdown may make repeating that level doubtful in 2019, the agency is leveraging technology to target RIAs’ senior investor policies and practices.

Wendy Vasquez, chief compliance officer of Cypress Capital in Nashville, Tenn., said her firm’s RIA underwent a remote SEC exam in July and was subsequently notified by SEC staff that the firm “didn’t have adequate procedures in place to protect vulnerable senior clients.”

Vasquez, speaking at the IA Compliance meeting, said seniors’ assets make up about 13 percent of Cypress’s total assets under management.

Vasquez said SEC staff wanted the firm to create written policies and practices to address the following situations:

- Clients who are nearing retirement or who have already retired.
- Clients who engage third parties to act under power of attorney.
- Clients who engage third parties to act as trustee.
- The death of clients.

“So we determined to develop a vulnerable seniors’ policy that helps advisors identify red flags and describes the escalation process for reporting red flags to us and to government agencies,” said Vasquez, who is in the process of drafting the policies and practices with legal counsel now.

“We are also adding a request for seniors’ trusted contacts, so the firm can notify a contact if we see anything unusual,” she said.

“Once you call a trusted client’s contact and say, ‘Mr. Jones is exhibiting signs of dementia’ or ‘his adult child may be stealing from him,’ that’s a bell that is hard to unring. ... So we have been very careful in drafting steps for staff to follow,” Vasquez said.

The policies are also being drafted to be specific about the limited information that can be disclosed to contacts and authorities “because we want to avoid any liability issues or privacy law violations,” she added.