FINRA and the SEC’s Office of Compliance Inspections and Examinations (OCIE) (collectively, the “Staff”) released the National Senior Investor Initiative (the “Report”) cautioning broker-dealers to reexamine their policies and procedures related to senior investors 65 years or older. The Report discusses strategies for broker-dealers to utilize when deciding which securities to recommend to senior investors.
The Report focused on the latest industry trends discovered through a series of 44 examinations of broker-dealers with regard to:
- Securities sold to senior investors
- Use of senior designations
- Marketing and communications
- Account documentation
- Customer complaints
One area the Report emphasized was concerns regarding broker-dealers recommending unsuitable securities to senior investors looking for a higher return. The Report urges broker-dealers to fully disclose to senior investors the terms and risks of the securities and the nature of non-traditional investments.
The Report noted that as senior investors are becoming more dependent on their retirement funds, it is imperative for broker-dealers to implement policies and procedures to protect their senior investors from: (1) elder financial abuse; and (2) potential diminished capacity.