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Regulation and Compliance > Federal Regulation > FINRA

SEC, NASAA, FINRA Update Best Practices for Serving Seniors

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As the number of elderly Americans is expected to more than double by 2050, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and North American Securities Administrators Association (NASAA) have updated a joint report outlining practices being used by financial services firms to strengthen their policies and procedures for serving senior investors.

The SEC, FINRA, and NASAA first published the report in 2008 to highlight proactive steps being taken by some financial services firms in serving senior customers, which was intended to assist the overall industry in enhancing compliance, supervisory, and other practices related to older investors. The newly updated report, the three groups say, summarizes additional practices now being used by financial services firms and securities professionals in serving senior investors.

The three groups report that nearly 40 million Americans are 65 or older, and this number is expected to more than double to 89 million by 2050. “As a result of the economic downturn, many older investors find themselves with smaller nest eggs than they anticipated. Estimates show that total retirement assets decreased by $4.5 trillion (25%) from 2007 to the first quarter of 2009,” the three groups state in joint release.

In releasing the updated report, Carlo di Florio, Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE), said, “Securities regulators are focused on ensuring a fair market for seniors where sales practices are responsible, the facts are clear, and products are suitable. This report helps firms understand increasing regulatory expectations and effective industry practices that better protect senior investors.”

The 2010 Addendum to the 2008 report focuses on the following categories:

? Communicating effectively with senior investors.

? Training and educating firm employees on senior-specific issues.

? Establishing an internal process for escalating issues and taking next steps.

? Obtaining information at account opening.

? Ensuring appropriateness of investments.

? Conducting senior-focused supervision, surveillance and compliance reviews.


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