February 23, 2016

Does Working with an RIA Give Seniors Extra Protection?

J. Randall Nye
"Relax, Luther, it's worse than you think."

- Tom Cruise as Ethan Hunt

"The more I see of people, the more I regret that I survived the war." 

- George S. Patton, Jr.

Introduction

As the quotes above would seem to imply, the answer of this author is NO!

But there may be a path to a YES answer.

A suggestion was made within an ABA Senior Lawyers Division task force studying financial exploitation that a relationship with a Registered Investment Advisor (RIA) would provide significant assurances against advisor exploitation abuses. With a background in financial services, the author of this article does not agree that such a relationship provides anywhere near the protections that many may assume exist.

To understand these conclusions, a basic understanding is required of the retail financial services environment seniors face, and then hone in on the role that an RIA plays. As used in this article, the term "exploit" is intended to cover not only fraudulent activity, but also include abusive and wasteful activity that goes beyond honest error or even actionable negligence.

The hope for a better answer stems from an observation of what the "smart money" is doing to manage wealth. In short: the ultra-wealthy have come to understand that certain important functions need to be owned and not outsourced.

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