SENIOR INVESTORS
General
SEC Approves Rules Relating To Financial Exploitation Of Seniors
The SEC approved: (1) the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; and (2) amendments to FINRA Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. New Rule 2165 and the amendments to Rule 4512 became effective on February 5, 2018
• FINRA Regulatory Notice 17-11 (March 2017): SEC Approves Rules Relating to Financial Exploitation of Seniors
• Protecting Seniors from Financial Exploitation
NASAA Model Act to Protect Seniors and Vulnerable Adults
In a significant step toward providing much needed protection for seniors and vulnerable adults, NASAA announced that its membership has voted to adopt a model act designed to protect vulnerable adults from financial exploitation. The model, entitled “An Act to Protect Vulnerable Adults from Financial Exploitation,” provides new tools to help detect and prevent financial exploitation of vulnerable adults.
Resources
FINRA Securities Helpline for Seniors: In 2015, FINRA launched the toll-free FINRA Securities Helpline for Seniors® to provide older investors with a supportive place to get assistance from knowledgeable FINRA staff related to concerns they have with their brokerage accounts and investments. Senior investors can call FINRA's new toll-free FINRA Securities Helpline for Seniors to get neutral, knowledgeable assistance with:
• Understanding how to review investment portfolios or account statements;
• Concerns about the handling of a brokerage account; and
• Investor tools and resources form FINRA, including BrokerCheck
1-844-57-HELPS (1-844-574-3577)
Monday - Friday
9 a.m. to 5 p.m. EST
FINRA Topic Page: Senior Investors
NASAA Broker-Dealer Section Study of Senior Practices and Procedures, 2016-2017
The Investment Products and Services Project Group under the direction of the NASAA Broker-Dealer Section Committee conducted a survey of broker-dealer practices and procedures applicable to senior investors. The report summarizes findings from the inquiry. Among the encouraging findings are that virtually all the broker-dealers had both internal processes to identify and internally report suspected diminished capacity or senior financial abuse, and trained their staff on these policies. Some of the findings were concerning however, including that almost half of the respondents did not identify any resource they use to assist their senior clients and only approximately one-third had policies and procedures specifically tailored for senior accounts. NASAA will continue to advocate for greater protection of senior investors and encourages broker-dealers and other financial services firms to review their policies and procedures regarding seniors in light of the findings and recommendations outlined in this report.
• NASAA Broker-Dealer Section Study of Senior Practices and Procedures, 2016-2017
Suitability
Guidance on Firm Responsibilities for Sales of Pension Income Stream Products
Pension income stream products typically involve an up-front lump sum payment to a pensioner in exchange for the rights to the pensioner’s future pension income payments. Regulatory Notice 16-12 discusses the characteristics of and investor protection issues presented by pension income stream products, as well as the legal status of these products. In addition, the Notice addresses the responsibilities of firms in supervising the sale of pension income stream products.
• FINRA Regulatory Notice 16-12 (April 2016): FINRA Provides Guidance on Firm Responsibilities for Sales of Pension Income Stream Products
FINRA Policies on the Use of Senior Designations
FINRA published Regulatory Notice 11-52 to remind firms of their supervisory obligations regarding the use of certifications and designations that imply expertise, certification, training or specialty in advising senior investors (senior designations). The Notice also outlines findings from a survey of firms and highlights sound practices used by firms with respect to senior designations.
• FINRA Regulatory Notice 11-52 (November 2011): FINRA Reminds Firms of Their Obligations Regarding the Supervision of Registered Persons Using Senior Designations