Baby boomers and seniors–don’t confuse the two. By today’s standards, boomers are middle aged, and they’re not ready to think about retirement, nor are they financially prepared for it. Seniors, who are more trusting than their cynical boomer counterparts, face their own challenge: fraud. That was the consensus of state and federal regulators and industry executives during a panel discussion at the North American Securities Administrators Association’s (NASAA) public policy conference in Washington last month.
The lack of retirement savings accumulated by most boomers shows they are “living in denial,” said Marc Lackritz, president of the Securities Industry Association (SIA). Studies have shown that the majority of boomers have saved less than $50,000 for their retirement, he said. That’s why it’s crucial for financial services firms to give them a “wake-up call,” he said. However, the best way to reach boomers is not by using scare tactics, argued Matt Thornhill, founder and president of The Boomer Project (www.boomerproject.com), but rather by appealing to boomers’ values and convincing them they still have time to “take control” of their financial lives.
Lori Richards, director of the SEC’s Office of Compliance, Inspections, and Examinations, said at the NASAA meeting that the SEC receives thousands of calls each year from seniors who’ve been defrauded or who’ve bought a product they didn’t understand. Last November, Senator Orrin Hatch (R-Utah) introduced the Elder Justice Act (S. 2010), to address abuse of the elderly. The bill has 14 cosponsors and is now in the Senate Finance Committee. On March 16, Rep. Peter King (R-New York) introduced a companion bill, H.R. 4993.
SEC Chairman Christopher Cox is on his own crusade to fight senior fraud. He told NASAA attendees that the SEC will conduct a senior summit this summer, which will bring together all regulators–including NASD and the states–to investigate senior fraud. With cooperation from NASD and state examiners, the SEC will also be conducting targeted exams of advisors who focus on the senior market, and will make visits to investment seminars and other senior-related events. Cox said the regulators will display “aggressive” enforcement of the securities laws in cases of fraud against seniors. The SEC just added a new page to its Web site for seniors (sec.gov/investor/seniors.shtml), which includes a “senior care package” of educational brochures. NASAA also has a Senior Investor Resource Center on its Web site (www.nasaa.org).
John Hancock introduced a new survivorship universal life insurance policy, Protection SUL-G, which is designed for clients who need lifetime guaranteed death-benefit coverage for two lives. The policy uses the 2001 CSO mortality table, which allows for an extension of the premium paying period and death benefit guarantee duration to age 121 of the younger insured, the company says.
J. & W. Seligman & Co., the New York-based investment manager and advisor, recently added automatic enrollment to its Growth 401(k) plan. Plan sponsors can choose to have all of their employees enrolled in the plan unless they opt out.
Morningstar is leveraging its expertise and that of newly acquired Ibbotson Associates in launching the Retirement Income Education Center. The Center is a Web site that advisors can use with clients to educate and illustrate retirement income plans. The site will only be available through third parties like broker/dealers or custodians.–Melanie Waddell