Difficult Conversations With Aging Clients Thursday, October 20 4:00 p.m. – 5:00 p.m. Financial advisors have numerous and sensitive conversations with clients and their families, potential trusted contacts and designees about cognitive decline. These challenges can manifest themselves throughout the client relationship, from account opening through inter-generational transfer of account assets. This panel addresses many of these issues, including privacy concerns and how best to engage in dialogue with clients throughout the life cycle of the relationship. Moderator: Kyle Innes Senior Associate, State Government Affairs SIFMA Panelists: Amy Daniels Managing Partner Edward Jones Christopher Majeski Compliance Executive Bank of America, Merrill Lynch Raymond Smith President Smith, Brown and Groover, Inc.
Difficult Conversations With Aging Clients Panelist Bios: Moderator: Kyle Innes is Senior Associate, State Government Affairs at SIFMA, where he monitors and engages on legislation and regulation across all 50 states. Mr. Innes also serves as the Lead Analyst on SIFMA’s Senior Investor Protection Initiative, where he advocates for legislative and regulatory changes to better protect senior and vulnerable investors, strengthens the organization’s relationship with scientific and academic experts and develops resources to assist member firms in protecting their clients. Prior to joining SIFMA, Mr. Innes served in senior policy roles on New York State Senate & New York City Council campaigns, and as a policy fellow for a New York City Councilmember. He has also consulted in a legal and policy capacity for multiple multinational companies and the Ocean Renewable Energy Coalition. Mr. Innes graduated from the American University Washington College of Law with a J.D. and an LL.M. in Law, Politics & Legislation and Administrative Law & Regulatory Practice, during which time he gained valuable experience at the U.S. House of Representatives, U.S. Senate and U.S. Marshals Service. Panelists: Amy Daniels is Managing Partner at Edward Jones. She began her career in 1998 as an on-call branch office administrator, supporting the administrative needs of 40 Arkansas offices. In 2002, she became a licensed financial advisor and continues to serve the long-term needs of individuals, multi-generational families, nonprofit organizations, and small-business owners. Ms. Daniels became a limited partner with Edward Jones in 2005. She has qualified for five Edward Jones Managing Partner’s Conferences, three Edward Jones Financial Advisor’s Leaders Conferences, and this year’s inaugural Edward Jones Top Women’s Conference. Ms. Daniels serves as the Arkansas Grassroots Taskforce Chair and on a working group with SIFMA focusing on Senior Investors. She has attended several conferences which recognize the nation’s top women financial advisors. She is deeply involved in her community and serves on the board of the White County Medical Foundation and is the Planned Giving Committee Chair. She also is on the board for the White County Community Foundation, and the Searcy Regional Chamber of Commerce. Ms. Daniels graduated from Central Baptist College in Conway, Ark., summa cum laude and earned a bachelor's degree in organizational management. Chris Majeski is the compliance executive for Merrill Edge, Merrill Lynch Wealth Management, and Wealth Management Banking. In this capacity, he oversees a team that is central to reinforcing a strong risk management culture and leading the overall compliance framework for each business unit. Over his 20 year career, Mr. Majeski has served in a number of capacities in financial services across the globe. Prior to assuming his current role in 2010, he was based in Singapore as the regional compliance executive for the Pacific Rim Wealth Management and Corporate Banking – Treasury Services lines of business, and also provided overall country coverage for S.E. Asia. Prior to that, he was based in the U.S. as internal audit executive for ML’s U.S. Banks and Global Corporate Credit & Commitments. In London, he served as internal audit executive for Europe, Middle East, and Africa Wealth Management and ML’s International Banks. Prior to joining ML in 1999, he was with Deloitte&Touche and PriceWaterhouseCoopers covering financial services. He received his Bachelor of Science in Accounting from Rider University. Raymond Smith is President of Smith Brown & Groover, Inc., a securities broker/dealer in Macon, Georgia. In 1997 he became a co-founder of Rivoli Bank and Trust, a commercial bank chartered in Georgia, and served on its board of directors until its sale in 2005. He also was a founding investor in Patriot Bank of Georgia in 2006. In 2010 Mr. Smith founded Cordia Bank Holding Co. and purchased a controlling interest in Bank of Virginia in Richmond. Mr. Smith previously served as chairman of a 5-state committee for the Financial Industry Regulatory Advisory Board (FINRA). He has also served on FINRA’s Small Firm Advisory Board in Washington, DC. After completing his M.B.A. in 1982, Mr. Smith was appointed Vice President at Prudential Capital, where he was responsible for asset and liability management and new product development. Subsequently he developed interest rate hedging strategies as a Vice President at E.F. Hutton in New York, and co-founded Capital Risk Management Corp., where he specialized in asset securitization. Mr. Smith holds leadership positions in various civic and charitable groups in Macon, Georgia. He earned his B.B.A from the University of Georgia and M.B.A. from the University of Texas.
2016 FINRA/SIFMA Senior Investor Protection Conference October 20-21, 2016 • Washington, DC
How do you personally feel, physically and emotionally, about the thought of engaging in a conversation around the possibility or reality of you or a loved one no longer being able to make financial decisions?ComfortableNeutralUncomfortable
How would you feel about your parent’s financial advisor asking you or your siblings to participate in their next financial review? Welcome the chance to become involved Indifferent to requestResist the involvementWelcome the involvement of some, but resist the involvement
How do you think your parents would react to including you or your siblings in financial discussions?Welcome the involvement Indifferent to the involvementResist the involvementWelcome the involvement of some, but resist the involvement
Do you (or your firm) have coaching, role playing and/or focused conversation aid materials available to assist in preparing for difficult conversations?YesNo
Do you believe that you (or your firm) have sufficient client approved materials around the topics of aging to assist you and your client (and their families) in the conversation?YesNo
7
Polling Question #5
CONVERSATION TIPS
WITH SENIOR OR VULNERABLE CLIENTS
2
When working with senior or vulnerable clients
• Does the client seem distracted or less mentally sharp?
• Is there a POA, trusted contact or other authorized person on the account?
• Can you urge the client to bring a family member to your next appointment?
• Does the reason stated for a disbursement seem in line for the client?
• Does the client seem hesitant to give you any information?
• If there is a concern, consider requesting authorization to speak with a family member or friend. Suggest they include this individual in meetings.
• Consider sending a letter to the client outlining discussions and decisions.
ISSUES TO BE MINDFUL OF
3
For difficult conversations
• Try to ascertain in a cordial manner whether the customer is aware of recent account activity.
• If your firm highlights a recent transfer or wire out of the account in its communications with you, use “verification” of that transaction as a basis for the discussion (i.e., “We’re just checking up,” “We’re just confirming”).
• If your firm highlights a drop in portfolio balance or a realized portfolio loss, you might say: “We are calling to confirm these changes in portfolio balance with you as we periodically make out bound calls in an effort to better protect our account holders. We realize this is a sensitive matter but just want to confirm you are aware of the account activity.”
• If your firm highlights increased or unusual trading activity, please discuss the activity and confirm that the customer is aware and comfortable with the trading activity. It may present an opportunity to update the Investment Objective and Profile.
TALKING POINTS
4
For difficult conversations (continued)
• If your firm highlights a recent material account change such as option approval, option level upgrade, margin account, day trading status, etc.; please discuss and confirm that the customers is aware and comfortable with the change.
• Most important point: If the customer indicates that someone else is trading the account, or “helping” with the account, check to see if there is a Trading Authority or Power of Attorney on file. If there is not, you should alert the appropriate point of contact in your firm.
• If there is an existing POA or TA on the account, please attempt to contact both the account holder and the authorized party.
• Do not use the words “elderly” or “older” when speaking with the customer.
TALKING POINTS
5
For particular concerns
Client’s account shows a sudden, rapid decline in value due to withdrawals:
• Speak with the client to see if there is a reasonable explanation for the decline.
Client develops a sudden, close relationship with a new friend:
• Probe for more information about the relationship.
• Try to determine if the new friend is asking for money or wants the client to invest in some scheme.
SUGGESTED ACTIONS
6
For particular concerns
Client asks you to wire money to an unknown third party:• Ask for more details about the transaction.
Client is concerned or confused about missing funds:
• Review account activity with client to determine if there truly are funds missing and to reduce client’s anxiety.
Client is not paying essential bills, despite having adequate income:
• Ask if client has been ill.• Discuss with joint account owner if possible.• Ask if a family member could join you and the client for
I/We authorize Edward Jones to contact the person(s) designated below:
In the event that concerns arise regarding the inability to make contact with me/us, or If concerns arise about my/our capacity to fully comprehend financial issues and/or make informed decisions concerning my
account(s) held with Edward Jones.
This authorization allows Edward Jones to provide information to the person(s) I/we designated below concerning the activity Edward Jones has observed or transactions I/we requested sufficient for the designated person(s) to determine what steps need to be taken to review the situation and identify actions that possibly should be taken to protect my property or person.
I/We realize this document is not a general or limited power of attorney or trading authorization and does not authorize Edward Jones to accept purchase, sale or other transaction-related instructions for my/our account(s) from the person(s) I/we designated below. I/We realize that if I/we have not properly executed a durable Power of Attorney document providing an appropriate person or entity with such powers, the person or entity that is contacted under this authorization will need to complete the steps necessary for a court of competent jurisdiction to appoint a guardian or conservator for my/our property and/or person before an appropriate person or entity will be in a position to take control of the account(s) on my/our behalf.
I/We understand Edward Jones reserves the right to take appropriate actions not described on this form, including contacting local, state or federal authorities, as deemed necessary for my protection, if concerns arise involving possible criminal activities against me/us or my/our ability to make informed decisions. The existence of this form should not be treated as an obligation to act on the part of Edward Jones or my financial advisor.
I/we understand that this authorization shall remain in effect until I/we provide Edward Jones with a signed written document withdrawing the authorization. Further, unless previously withdrawn, this authorization will continue to be effective even if I/we become incapacitated.
_________________________________ ________________________________ _______________________ Name of authorized individual Relationship to client Phone Number(s)
_________________________________ ________________________________ _______________________ Name of authorized individual Relationship to client Phone Number(s)
Client Signature(s)
Signature Printed Name Date
Signature Printed Name Date
Revised 31 Jul 2015 Page 1 of 1
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(Continued on the next page)
CHECKLIST
Health/Well-being
■■ Help identify and document your loved one's medical professionals, pharmacy, medications and dosages.
■■ Establish a network of potential caregivers, including family members, friends, neighbors and health care professionals.
■■ Consider purchasing an alert system to allow your loved one to call for help in an emergency.
■■ Get permission from your loved one to access medical information to ensure HIPAA (Health Insurance Portability and Accountability Act) privacy laws are met. Without this, a medical provider can't give medical information to anyone other than the patient.
■■ Research organizations such as the Alzheimer's Association (www.alz.org), the Caregiver Action Network (www.caregiveraction.org) and the Family Caregiver Alliance (www.caregiver.org).
Housing
■■ If your loved one can continue to live in his or her home, research local social service or faith-based agencies that may assist with volunteer home maintenance or other needs.
■■ Assess whether your loved one's current living situation is still a good choice with respect to mobility, cost and maintenance issues.
• If your loved one has trouble with stairs or other obstacles, discuss the options for improving access and safety.
■■ Gather information about assisted living facilities and other long-term care options. See the U.S. Administration on Aging's Eldercare Locator at www.eldercare.gov.
■■ Understand the different levels of care available at senior living centers – independent living, assisted living, nursing care, etc. – to determine the right place for your loved one.
Financial Considerations – With your loved one’s consent, assist him or her to:
■■ Review financial records and insurance coverage to get a clear picture of his or her situation.
■■ Identify a strategy to make financial decisions. Who will handle daily money management? Will a group work together to make larger financial decisions?
Many people will be responsible for an elderly parent or loved one at some point. We understand that this can be an overwhelming endeavor – and we want to help. This checklist can help you manage the variety of issues you’ll need to consider.
Edward Jones, its financial advisors and employees are not estate planners and do not provide tax or legal advice. You should consult a qualified tax or legal professional for advice regarding your specific situation.
■■ Contact financial institutions and complete forms so those authorized by your loved one can access his or her accounts and safe-deposit box.
■■ Consider establishing automatic payment of recurring bills.
■■ Investigate whether local social service agencies can help with heating fuel costs or other financial needs.
■■ Look into local property tax-deferral or abatement programs.
■■ Establish direct deposit of benefit checks into bank and brokerage accounts.
■■ Learn about his or her Social Security benefits at www.ssa.gov.
■■ Navigate Medicare, Medicaid and any other health care benefits he or she may be receiving.
• Medicare resources for caregivers: www.medicare.gov/campaigns/caregiver/caregiver.html • Veterans benefits: www.va.gov
■■ Discuss how he or she will pay for out-of-pocket costs such as premiums, deductibles and other items Medicare doesn't cover.
■■ Research trust services options to manage expenses, investments and financial paperwork.
Important Documents
■■ Help your loved one locate his or her will, living will, health care or durable power of attorney, and any trusts that may exist. If he or she doesn't have these documents, have your loved one consider setting up any that are appropriate.
■■ Offer to accompany your loved one to meet with a financial advisor to review savings and investments, including Individual Retirement Accounts (IRAs), 401(k) accounts, and life insurance and annuities. Ensure beneficiaries are up-to-date.
■■ Help locate any documents for prearranged funeral or burial arrangements.
Caring for an aging loved one is a challenging responsibility, but you don’t have to do it on your own. We are here to offer advice and answer any questions you may have along the way. Talk to your financial advisor to identify strategies that may work for you.
in section 505(a) shall establish appropriate standards for the finan-cial institutions subject to their jurisdiction relating to administra-tive, technical, and physical safeguards—
(1) to insure the security and confidentiality of customerrecords and information;
(2) to protect against any anticipated threats or hazardsto the security or integrity of such records; and
(3) to protect against unauthorized access to or use ofsuch records or information which could result in substantialharm or inconvenience to any customer.
SEC. 502. OBLIGATIONS WITH RESPECT TO DISCLOSURES OF PER-SONAL INFORMATION.
(a) NOTICE REQUIREMENTS.—Except as otherwise provided inthis subtitle, a financial institution may not, directly or throughany affiliate, disclose to a nonaffiliated third party any nonpublicpersonal information, unless such financial institution provides orhas provided to the consumer a notice that complies with section503.
(b) OPT OUT.—(1) IN GENERAL.—A financial institution may not disclose
nonpublic personal information to a nonaffiliated third partyunless—
(A) such financial institution clearly and conspicuouslydiscloses to the consumer, in writing or in electronic formor other form permitted by the regulations prescribed undersection 504, that such information may be disclosed tosuch third party;
(B) the consumer is given the opportunity, before thetime that such information is initially disclosed, to directthat such information not be disclosed to such third party;and
(C) the consumer is given an explanation of how theconsumer can exercise that nondisclosure option.(2) EXCEPTION.—This subsection shall not prevent a finan-
cial institution from providing nonpublic personal informationto a nonaffiliated third party to perform services for or functionson behalf of the financial institution, including marketing ofthe financial institution’s own products or services, or financialproducts or services offered pursuant to joint agreementsbetween two or more financial institutions that comply withthe requirements imposed by the regulations prescribed undersection 504, if the financial institution fully discloses the pro-viding of such information and enters into a contractual agree-ment with the third party that requires the third party tomaintain the confidentiality of such information.(c) LIMITS ON REUSE OF INFORMATION.—Except as otherwise
provided in this subtitle, a nonaffiliated third party that receivesfrom a financial institution nonpublic personal information underthis section shall not, directly or through an affiliate of suchreceiving third party, disclose such information to any other personthat is a nonaffiliated third party of both the financial institutionand such receiving third party, unless such disclosure would belawful if made directly to such other person by the financial institu-tion.
(d) LIMITATIONS ON THE SHARING OF ACCOUNT NUMBERINFORMATION FOR MARKETING PURPOSES.—A financial institution
15 USC 6802.
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113 STAT. 1438 PUBLIC LAW 106–102—NOV. 12, 1999
shall not disclose, other than to a consumer reporting agency,an account number or similar form of access number or accesscode for a credit card account, deposit account, or transactionaccount of a consumer to any nonaffiliated third party for usein telemarketing, direct mail marketing, or other marketing throughelectronic mail to the consumer.
(e) GENERAL EXCEPTIONS.—Subsections (a) and (b) shall notprohibit the disclosure of nonpublic personal information—
(1) as necessary to effect, administer, or enforce a trans-action requested or authorized by the consumer, or in connec-tion with—
(A) servicing or processing a financial product orservice requested or authorized by the consumer;
(B) maintaining or servicing the consumer’s accountwith the financial institution, or with another entity aspart of a private label credit card program or other exten-sion of credit on behalf of such entity; or
(C) a proposed or actual securitization, secondarymarket sale (including sales of servicing rights), or similartransaction related to a transaction of the consumer;(2) with the consent or at the direction of the consumer;(3)(A) to protect the confidentiality or security of the finan-
cial institution’s records pertaining to the consumer, the serviceor product, or the transaction therein; (B) to protect againstor prevent actual or potential fraud, unauthorized transactions,claims, or other liability; (C) for required institutional riskcontrol, or for resolving customer disputes or inquiries; (D)to persons holding a legal or beneficial interest relating tothe consumer; or (E) to persons acting in a fiduciary or rep-resentative capacity on behalf of the consumer;
(4) to provide information to insurance rate advisoryorganizations, guaranty funds or agencies, applicable ratingagencies of the financial institution, persons assessing theinstitution’s compliance with industry standards, and theinstitution’s attorneys, accountants, and auditors;
(5) to the extent specifically permitted or required underother provisions of law and in accordance with the Right toFinancial Privacy Act of 1978, to law enforcement agencies(including a Federal functional regulator, the Secretary of theTreasury with respect to subchapter II of chapter 53 of title31, United States Code, and chapter 2 of title I of PublicLaw 91–508 (12 U.S.C. 1951–1959), a State insurance authority,or the Federal Trade Commission), self-regulatory organiza-tions, or for an investigation on a matter related to publicsafety;
(6)(A) to a consumer reporting agency in accordance withthe Fair Credit Reporting Act, or (B) from a consumer reportreported by a consumer reporting agency;
(7) in connection with a proposed or actual sale, merger,transfer, or exchange of all or a portion of a business or oper-ating unit if the disclosure of nonpublic personal informationconcerns solely consumers of such business or unit; or
(8) to comply with Federal, State, or local laws, rules,and other applicable legal requirements; to comply with a prop-erly authorized civil, criminal, or regulatory investigation orsubpoena or summons by Federal, State, or local authorities;or to respond to judicial process or government regulatory
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113 STAT. 1439PUBLIC LAW 106–102—NOV. 12, 1999
authorities having jurisdiction over the financial institutionfor examination, compliance, or other purposes as authorizedby law.
SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY.
(a) DISCLOSURE REQUIRED.—At the time of establishing a cus-tomer relationship with a consumer and not less than annuallyduring the continuation of such relationship, a financial institutionshall provide a clear and conspicuous disclosure to such consumer,in writing or in electronic form or other form permitted by theregulations prescribed under section 504, of such financial institu-tion’s policies and practices with respect to—
(1) disclosing nonpublic personal information to affiliatesand nonaffiliated third parties, consistent with section 502,including the categories of information that may be disclosed;
(2) disclosing nonpublic personal information of personswho have ceased to be customers of the financial institution;and
(3) protecting the nonpublic personal information of con-sumers.
Such disclosures shall be made in accordance with the regulationsprescribed under section 504.
(b) INFORMATION TO BE INCLUDED.—The disclosure requiredby subsection (a) shall include—
(1) the policies and practices of the institution with respectto disclosing nonpublic personal information to nonaffiliatedthird parties, other than agents of the institution, consistentwith section 502 of this subtitle, and including—
(A) the categories of persons to whom the informationis or may be disclosed, other than the persons to whomthe information may be provided pursuant to section 502(e);and
(B) the policies and practices of the institution withrespect to disclosing of nonpublic personal information ofpersons who have ceased to be customers of the financialinstitution;(2) the categories of nonpublic personal information that
are collected by the financial institution;(3) the policies that the institution maintains to protect
the confidentiality and security of nonpublic personal informa-tion in accordance with section 501; and
(4) the disclosures required, if any, under section603(d)(2)(A)(iii) of the Fair Credit Reporting Act.
SEC. 504. RULEMAKING.
(a) REGULATORY AUTHORITY.—(1) RULEMAKING.—The Federal banking agencies, the
National Credit Union Administration, the Secretary of theTreasury, the Securities and Exchange Commission, and theFederal Trade Commission shall each prescribe, after consulta-tion as appropriate with representatives of State insuranceauthorities designated by the National Association of InsuranceCommissioners, such regulations as may be necessary to carryout the purposes of this subtitle with respect to the financialinstitutions subject to their jurisdiction under section 505.
(2) COORDINATION, CONSISTENCY, AND COMPARABILITY.—Each of the agencies and authorities required under paragraph(1) to prescribe regulations shall consult and coordinate with
15 USC 6804.
15 USC 6803.
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113 STAT. 1443PUBLIC LAW 106–102—NOV. 12, 1999
(8) the feasibility of different approaches, including opt-out and opt-in, to permit customers to direct that confidentialinformation not be shared with affiliates and nonaffiliated thirdparties; and
(9) the feasibility of restricting sharing of information forspecific uses or of permitting customers to direct the usesfor which information may be shared.(b) CONSULTATION.—The Secretary shall consult with represent-
atives of State insurance authorities designated by the NationalAssociation of Insurance Commissioners, and also with financialservices industry, consumer organizations and privacy groups, andother representatives of the general public, in formulating andconducting the study required by subsection (a).
(c) REPORT.—On or before January 1, 2002, the Secretary shallsubmit a report to the Congress containing the findings and conclu-sions of the study required under subsection (a), together withsuch recommendations for legislative or administrative action asmay be appropriate.
SEC. 509. DEFINITIONS.
As used in this subtitle:(1) FEDERAL BANKING AGENCY.—The term ‘‘Federal banking
agency’’ has the same meaning as given in section 3 of theFederal Deposit Insurance Act.
(2) FEDERAL FUNCTIONAL REGULATOR.—The term ‘‘Federalfunctional regulator’’ means—
(A) the Board of Governors of the Federal ReserveSystem;
(B) the Office of the Comptroller of the Currency;(C) the Board of Directors of the Federal Deposit Insur-
ance Corporation;(D) the Director of the Office of Thrift Supervision;(E) the National Credit Union Administration Board;
and(F) the Securities and Exchange Commission.
(3) FINANCIAL INSTITUTION.—(A) IN GENERAL.—The term ‘‘financial institution’’
means any institution the business of which is engagingin financial activities as described in section 4(k) of theBank Holding Company Act of 1956.
(B) PERSONS SUBJECT TO CFTC REGULATION.—Notwith-standing subparagraph (A), the term ‘‘financial institution’’does not include any person or entity with respect to anyfinancial activity that is subject to the jurisdiction of theCommodity Futures Trading Commission under the Com-modity Exchange Act.
(C) FARM CREDIT INSTITUTIONS.—Notwithstandingsubparagraph (A), the term ‘‘financial institution’’ does notinclude the Federal Agricultural Mortgage Corporation orany entity chartered and operating under the Farm CreditAct of 1971.
(D) OTHER SECONDARY MARKET INSTITUTIONS.—Not-withstanding subparagraph (A), the term ‘‘financial institu-tion’’ does not include institutions chartered by Congressspecifically to engage in transactions described in section502(e)(1)(C), as long as such institutions do not sell or
15 USC 6809.
Deadline.
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113 STAT. 1444 PUBLIC LAW 106–102—NOV. 12, 1999
transfer nonpublic personal information to a nonaffiliatedthird party.(4) NONPUBLIC PERSONAL INFORMATION.—
(A) The term ‘‘nonpublic personal information’’ meanspersonally identifiable financial information—
(i) provided by a consumer to a financial institu-tion;
(ii) resulting from any transaction with the con-sumer or any service performed for the consumer; or
(iii) otherwise obtained by the financial institution.(B) Such term does not include publicly available
information, as such term is defined by the regulationsprescribed under section 504.
(C) Notwithstanding subparagraph (B), such term—(i) shall include any list, description, or other
grouping of consumers (and publicly available informa-tion pertaining to them) that is derived using anynonpublic personal information other than publiclyavailable information; but
(ii) shall not include any list, description, or othergrouping of consumers (and publicly available informa-tion pertaining to them) that is derived without usingany nonpublic personal information.
(5) NONAFFILIATED THIRD PARTY.—The term ‘‘nonaffiliatedthird party’’ means any entity that is not an affiliate of, orrelated by common ownership or affiliated by corporate controlwith, the financial institution, but does not include a jointemployee of such institution.
(6) AFFILIATE.—The term ‘‘affiliate’’ means any companythat controls, is controlled by, or is under common controlwith another company.
(7) NECESSARY TO EFFECT, ADMINISTER, OR ENFORCE.—Theterm ‘‘as necessary to effect, administer, or enforce the trans-action’’ means—
(A) the disclosure is required, or is a usual, appropriate,or acceptable method, to carry out the transaction or theproduct or service business of which the transaction isa part, and record or service or maintain the consumer’saccount in the ordinary course of providing the financialservice or financial product, or to administer or servicebenefits or claims relating to the transaction or the productor service business of which it is a part, and includes—
(i) providing the consumer or the consumer’s agentor broker with a confirmation, statement, or otherrecord of the transaction, or information on the statusor value of the financial service or financial product;and
(ii) the accrual or recognition of incentives orbonuses associated with the transaction that are pro-vided by the financial institution or any other party;(B) the disclosure is required, or is one of the lawful
or appropriate methods, to enforce the rights of the finan-cial institution or of other persons engaged in carryingout the financial transaction, or providing the product orservice;
(C) the disclosure is required, or is a usual, appropriate,or acceptable method, for insurance underwriting at the
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113 STAT. 1445PUBLIC LAW 106–102—NOV. 12, 1999
consumer’s request or for reinsurance purposes, or for anyof the following purposes as they relate to a consumer’sinsurance: Account administration, reporting, investigating,or preventing fraud or material misrepresentation, proc-essing premium payments, processing insurance claims,administering insurance benefits (including utilizationreview activities), participating in research projects, or asotherwise required or specifically permitted by Federal orState law; or
(D) the disclosure is required, or is a usual, appropriateor acceptable method, in connection with—
(i) the authorization, settlement, billing, proc-essing, clearing, transferring, reconciling, or collectionof amounts charged, debited, or otherwise paid usinga debit, credit or other payment card, check, or accountnumber, or by other payment means;
(ii) the transfer of receivables, accounts or intereststherein; or
(iii) the audit of debit, credit or other paymentinformation.
(8) STATE INSURANCE AUTHORITY.—The term ‘‘State insur-ance authority’’ means, in the case of any person engagedin providing insurance, the State insurance authority of theState in which the person is domiciled.
(9) CONSUMER.—The term ‘‘consumer’’ means an individualwho obtains, from a financial institution, financial productsor services which are to be used primarily for personal, family,or household purposes, and also means the legal representativeof such an individual.
(10) JOINT AGREEMENT.—The term ‘‘joint agreement’’ meansa formal written contract pursuant to which two or more finan-cial institutions jointly offer, endorse, or sponsor a financialproduct or service, and as may be further defined in the regula-tions prescribed under section 504.
(11) CUSTOMER RELATIONSHIP.—The term ‘‘time of estab-lishing a customer relationship’’ shall be defined by the regula-tions prescribed under section 504, and shall, in the case ofa financial institution engaged in extending credit directly toconsumers to finance purchases of goods or services, meanthe time of establishing the credit relationship with the con-sumer.
SEC. 510. EFFECTIVE DATE.
This subtitle shall take effect 6 months after the date onwhich rules are required to be prescribed under section 504(a)(3),except—
(1) to the extent that a later date is specified in the rulesprescribed under section 504; and
(2) that sections 504 and 506 shall be effective upon enact-ment.
15 USC 6801note.
Regulations.
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Board of Governors of the Federal Reserve System Commodity Futures Trading Commission
Consumer Financial Protection Bureau Federal Deposit Insurance Corporation
Federal Trade Commission National Credit Union Administration
Office of the Comptroller of the Currency Securities and Exchange Commission
Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults
PURPOSE
The Board of Governors of the Federal Reserve System (Federal Reserve), Commodity Futures Trading Commission (CFTC),1 Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Federal Trade Commission (FTC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Securities and Exchange Commission (SEC) are issuing this guidance to financial institutions to clarify the applicability of privacy provisions of the Gramm-Leach-Bliley Act (GLBA) to reporting suspected financial exploitation of older adults.
Employees of depository institutions and other financial service providers that constitute “financial institutions” for purposes of the GLBA may observe signs of possible financial exploitation of an older adult. Various federal and state authorities either require or encourage reporting of this type of information to the appropriate agency. This guidance clarifies that reporting suspected financial abuse of older adults to appropriate local, state, or federal agencies does not, in general, violate the privacy provisions of the GLBA or its implementing regulations.2 In fact, specific privacy provisions of the GLBA and its implementing regulations permit the sharing of this type of information under appropriate circumstances without complying with notice and opt-out requirements.3
1 The CFTC is issuing this document as staff guidance. 2 While this guidance discusses when reporting is allowed under the GLBA, it does not address any other federal or state laws that may regulate such reporting. Also, the guidance does not specifically address risk management expectations for financial institutions related to the reporting of elder abuse.3 This guidance’s analysis of the GLBA’s privacy provisions builds on joint guidance issued by several federal agencies in 2002 that specifically addressed disclosures to the Michigan Family Independence Agency. See Letter to Hon. Debbie Stabenow, July 3, 2002, available at http://www.americanbar.org/content/dam/aba/administrative/law_aging/2011/2011_aging_ea_bank_rptg_op_ltr.auth checkdam.pdf.
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BACKGROUND
Elder abuse includes the illegal or improper use of an older adult’s funds, property, or assets.4
Recent studies suggest that financial exploitation is the most common form of elder abuse and that only a small fraction of incidents are reported.5 Older adults can become targets of financial exploitation by family members, caregivers, scam artists, financial advisers, home repair contractors, fiduciaries (such as agents under power of attorney and guardians), and others. Older adults are attractive targets because they may have significant assets or equity in their homes. They may be especially vulnerable due to isolation, cognitive decline, physical disability, health problems, and/or the recent loss of a partner, family member, or friend. Financial institutions can play a key role in preventing and detecting elder financial exploitation. A financial institution’s familiarity with older adults it encounters may enable it to spot irregular transactions, account activity, or behavior.6 Prompt reporting of suspected financial exploitation to adult protective services, law enforcement,7 and/or long-term care ombudsmen8 can trigger appropriate intervention, prevention of financial losses, and other remedies.
4 See the National Center on Elder Abuse definitions available at http://www.ncea.aoa.gov/FAQ/Type_Abuse/index.aspx. The Older Americans Act, as amended by the Elder Justice Act of 2009, defines exploitation as “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an elder for monetary or personal benefit, profit, or gain, or that results in depriving an elder of rightful access to, or use of, benefits, resources, belongings, or assets.” 42 U.S.C. 1397j(8). 5 Acierno, R., M. A. Hernandez, A. B. Amstadter, H. S. Resnick, K. Steve, W. Muzzy, and D. G. Kilpatrick, “Prevalence and Correlates of Emotional, Physical, Sexual and Financial Abuse and Potential Neglect in the United States: The National Elder Mistreatment Study,” American Journal of Public Health 100(2): 292–97; Lifespan of Greater Rochester, Inc., et al., Under the Radar: New York State Elder Abuse Prevention Study, (Rochester, NY: Lifespan of Greater Rochester, Inc., May 2011).6 Treasury Department rules require recipients of federal nontax payments to receive payment by electronic funds transfer, with an allowance for certain waivers from the requirement. The rule applies to recipients of Social Security, Veterans Affairs, Supplemental Security Income, Railroad Retirement Board, Department of Labor, and Office of Personnel Management benefit payments. Benefit recipients may have payments directly deposited to an account at a financial institution or to a Direct Express debit card account. See 75 Fed. Reg. 80315 (Dec. 22, 2010). Financial institutions should be mindful that this change may result in additional electronic funds transfer activity involving the accounts of older adults.7 Financial institutions file “Suspicious Activity Reports” with the Financial Crimes Enforcement Network (FinCEN), a Bureau of the U.S. Department of the Treasury, involving money laundering and terrorist financing as well as activities related to elder abuse and other consumer fraud. The reports assist law enforcement in identifying individuals and organizations involved in financial crime. See FinCEN, Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation, FIN-2011-A003 (Feb. 22, 2011), available at http://www.fincen.gov/statutes_regs/guidance/pdf/fin-2011-a003.pdf. 8 Long-Term Care Ombudsmen are advocates for residents of nursing homes, board and care homes, assisted living facilities and similar adult care facilities. Under the federal Older Americans Act, each state has an Office of the State Long-Term Care Ombudsman that addresses complaints and advocates for improvements in the long-term care system. Local ombudsman staff and volunteers work to resolve problems of individual residents. For more information, see http://www.aoa.gov/AoARoot/AoA_Programs/Elder_Rights/Ombudsman/index.aspx. To find your local ombudsman program, search by location at www.eldercare.gov.
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DISCUSSION OF PRIVACY PROTECTIONS
The GLBA establishes a general rule that a financial institution may not disclose any nonpublic personal information about a consumer to any nonaffiliated third party unless the financial institution first provides the consumer with a notice that describes the disclosure (as well as other aspects of its privacy policies and practices) and a reasonable opportunity to opt out of the disclosure, and the consumer does not opt out. However, section 502(e) of the GLBA provides a variety of exceptions to this general rule that permit a financial institution to disclose information to nonaffiliated third parties without first complying with notice and opt-out requirements. Generally, disclosure of nonpublic personal information about consumers to local, state, or federal agencies for the purpose of reporting suspected financial abuse of older adults will fall within one or more of the exceptions.9 These disclosures of information may be made either at the agency’s request or on the financial institution’s initiative.
The following are specific exceptions to the GLBA’s notice and opt-out requirement that, to the extent applicable, would permit sharing of nonpublic personal information about consumers with local, state, or federal agencies for the purpose of reporting suspected financial abuse of older adults without the consumer’s authorization and without violating the GLBA:
• A financial institution may disclose nonpublic personal information to comply with federal, state, or local laws, rules and other applicable legal requirements, such as state laws that require reporting by financial institutions of suspected abuse. (15 U.S.C. 6802(e)(8) and implementing regulations at ___.15(a)(7)(i)). 10
• A financial institution may disclose nonpublic personal information to respond to a properly authorized civil, criminal, or regulatory investigation, or subpoena or summons by federal, state, or local authorities or to respond to judicial process or government regulatory authorities having jurisdiction for examination, compliance, or other purposes as authorized by law. (15 U.S.C. 6802(e)(8) and implementing regulations at ___.15(a)(7)(ii)-(iii)).
• A financial institution may disclose nonpublic personal information to protect against or prevent actual or potential fraud, unauthorized transactions, claims, or other liability. (15 U.S.C. 6802(e)(3)(B) and implementing regulations at ___.15(a)(2)(ii)). For example, this exception generally would allow a financial institution to disclose to appropriate authorities nonpublic personal information in order to:
o report incidents that result in taking an older adult’s funds without actual consent, or
o report incidents of obtaining an older adult’s consent to sign over assets through misrepresentation of the intent of the transaction.
9 See Section 502(e) of the GLBA (15 U.S.C. 6802(e)). 10 The CFPB’s, FTC’s, CFTC’s, and SEC’s implementing regulations are contained in 12 CFR part 1016, 16 CFR part 313, 17 CFR part 160, and 17 CFR part 248, respectively. For ease of reference, this discussion uses the shared numerical suffix of each of these agencies’ regulations.
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• To the extent specifically permitted or required under other provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.), a financial institution may disclose nonpublic personal information to law enforcement agencies (including the CFPB, the federal functional regulators, and the FTC), self-regulatory organizations, or for an investigation on a matter related to public safety. (15 U.S.C. 6802(e)(5) and implementing regulations at ___.15(a)(4)).
In addition, a financial institution may disclose nonpublic personal information with the consumer’s consent or consent of the consumer’s legal representative. (15 U.S.C. 6802(e)(2) and implementing regulations at ___.15(a)(1)).
POSSIBLE SIGNS OF FINANCIAL ABUSE OF OLDER ADULTS
The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published an advisory in February 2011 that describes potential signs of elder financial exploitation that might trigger the filing of a Suspicious Activity Report (SAR).11 As described in the advisory, among the possible signs of abuse are:
• Erratic or unusual banking transactions, or changes in banking patterns: o Frequent large withdrawals, including daily maximum currency withdrawals from
an ATM; o Sudden non-sufficient fund activity; o Uncharacteristic nonpayment for services, which may indicate a loss of funds or
access to funds; o Debit transactions that are inconsistent for the older adult; o Uncharacteristic attempts to wire large sums of money; or o Closing of CDs or accounts without regard to penalties.
• Interactions with older adults or caregivers:12
o A caregiver or other individual shows excessive interest in the older adult's finances or assets, does not allow the older adult to speak for himself, or is reluctant to leave the older adult's side during conversations;
o The older adult shows an unusual degree of fear or submissiveness toward a caregiver, or expresses a fear of eviction or nursing home placement if money is not given to a caretaker;
o The financial institution is unable to speak directly with the older adult, despite repeated attempts to contact him or her;
o A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the older adult without proper documentation;
11 See footnote 6 above. 12 References to “caregiver” or “caretaker” also may apply to other individuals who may be involved in transactions of the type described in the FinCEN advisory.
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o The older adult moves away from existing relationships and toward new associations with other “friends” or strangers;
o The older adult's financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual; or
o The older adult lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters.
Further information about the use of Suspicious Activity Reports to report suspected elder financial exploitation is available in FinCEN’s “The SAR Activity Review” published in May 2013.13 In addition, if financial institutions or other organizations are interested in raising public awareness among older adults and their caregivers about preventing, identifying, and responding to elder financial exploitation, Money Smart for Older Adults, a financial resource tool, serves as a helpful source of training and information.14
13 See “The SAR Activity Review: Trends Tips & Issues,” Issue 23, May 2013, available at http://www.fincen.gov/news_room/rp/files/sar_tti_23.pdf. 14 Money Smart for Older Adults (June 2013), available at www.fdic.gov or www.consumerfinance.gov.
Account Number ______________ and any other accounts I may have at [Firm Name]
Contact Authorization Form
By my signature below, I/We authorize [Firm Name] and its affiliates to share my/our nonpublic personal information* held at [Firm Name] to the named Authorized Individual(s) identified below.
I/We authorize this information to be shared with the Authorized Individual(s) in the discretion of [Firm Name]. This authorization includes, but is not limited to, any of the undersigned client's information regarding securities, insurance, bank related, financial planning or other financial products or services offered by or through [Firm Name] or any financial information the undersigned may have provided to [Firm Name].
I/We understand that [Firm Name] may contact the named Authorized Individual(s) if there are questions/concerns about my whereabouts or health status (i.e., if [Firm Name] becomes concerned that I might no longer be able to handle my financial affairs) or in the event that [Firm Name] becomes concerned that I may be a victim of fraud or exploitation.
[Firm Name] suggests that the named Authorized Individual(s) not be someone authorized to transact business on the account, or who is already otherwise able to receive the information described above.
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* “Nonpublic personal information” includes, but is not limited to: financial account information and balances, recommendation for purchase of a security or insurance product, and, as defined in Title V of the Federal Financial Services Modernization Act of 1999 as amended, or as defined by any other federal or state law, personally identifiable financial information-(i) provided by a consumer to a financial institution; (ii) resulting from any transaction with the consumer or any service performed for the consumer; or (iii) otherwise obtained by the financial institution.
