National Senior Investor Initiative Report

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:

  1. Securities sold to senior investors
  2. Trainings
  3. Use of senior designations
  4. Marketing and communications
  5. Account documentation
  6. Suitability
  7. Disclosures
  8. Customer complaints
  9. Supervision.

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.

FINRA Press Release: https://www.finra.org/media-center/news-releases/2015/sec-staff-and-finra-issue-report-national-senior-investor-initiative

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