Professional Responsibility and Seniors: Advisor Guidance for Ethical Practice

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such as market returns, inflation, government retirement programs and taxation. • Seniors’ need to balance individual future financial needs with the desire to fund dependents and others upon their death, including family members and charitable causes. Complexity arises from succession planning through wills, estate, trust and tax planning. • Making the choice to remain a participant in an employer defined benefit pension plan or accept payment of a lump-sum commuted value. • Deferred Sales Charge (DSC) commission product sales. DSC may be appropriate and suitable, depending on the situation of the client. However, rationale must substantiate such a choice by the advisor if a future challenge arises. • Death or incapacity of a spouse, particularly if the surviving spouse had little or no involvement in the household’s financial management. • Unrealistic expectations for retirement, whether in terms of retirement date, lifestyle, the financial legacy for their heirs, or otherwise. • Non-investment specific considerations, such as tax, seniors’ government benefits and estate planning. For instance, a client with significant unrealized capital gains may abruptly recognize that transitioning to a more conservative portfolio will trigger significant capital gains tax liabilities and reduced eligibility for government benefits. • The involvement of family members and other interested parties in a client’s financial affairs. In the vast majority of situations, their participation is helpful since the objective of that involvement is the client’s betterment and well-being. However, in rare situations, 10
concerns may arise about whether the engagement is self-serving and directed to personal enrichment of the “helper.” • The significant compliance and legal risks, complexity, and costs associated with handling seniors’ accounts. Advisors and firms may inadvertently be drawn into family matter disputes. One example cited was the interposition of a new third party into an account relationship as the result of a personal relationship with the client that other family members objected to. Another example identified was legal responsibilities when acting on so-called “deathbed” requests to transfer accounts to joint ownership to avoid probate taxes or liability for acting on purportedly valid legal powers of attorney. • Maintaining up-to-date account documentation, including new client information and Power of Attorney upon the death of a spouse. • The difficulty of after-the-fact adjudication of disputes and complaints involving senior investors. The client may no longer be alive or capable of providing a statement and, as a result, assertions can be made by other interested parties (e.g. beneficiary, estate trustees) about what “should have” been done. Documentary evidence of numerous and complex interactions can be critically important in such cases. • Older investors may be targets for financial abuse. This can come from unknown third parties, community members, friends, and relatives. Advisors and firms should be aware of the issues, and although their ability to prevent clients from being financially taken advantage of by third parties is limited, they can be a trusted checkpoint. For instance, advisors can encourage older investors to forward emails to them that appear to be vishing, and the advisor can verify the authenticity of the email. 11
Page 1 and 2: Continuing Education for Financial
Page 3 and 4: Essential Ethics There are two fund
Page 5 and 6: International Tax Compliance throug
Page 7 and 8: The Financial Planning Standards Co
Page 9: should be exercised when dealing wi
Page 13 and 14: Key Seniors’ Issues and Practice
Page 15: Mental Capacity and Financial Decis

Professional Responsibility and Seniors: Advisor Guidance for Ethical Practice

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