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Regulation and Compliance > Federal Regulation > SEC

Senior best practices: The focus of new fed report

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The Securities and Exchange Commission, Financial Industry Regulatory Authority and North American Securities Administrators Association have issued a joint report which outlines practices used by
financial services firms to better serve senior investors as they approach and begin retirement.

The SEC, FINRA and NASAA first published the report in 2008 to highlight proactive steps being taken by some financial services firms to address senior service issues. It was intended to assist the overall industry in enhancing compliance, supervisory and other practices related to older investors. The 2010 addendum summarizes additional practices now being used in the industry.

Carlo di Florio, director of the SEC’s Office of Compliance Inspections and Examinations, says, “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 new report focuses on the following best practices that apply to serving seniors:

  • Communicating effectively with senior clients.
  • 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 recommended.
  • Conducting senior-focused supervision, surveillance and compliance reviews.

The report’s suggestions for communicating with seniors contain several useful ideas for advisors,

  1. Publishing a brochure outlining fraud awareness, advising clients to monitor their credit reports and warning clients never to sign a blank or incomplete document or give cash to their advisors.
  2. Putting a link on your website to other sites, such as the SEC Investor Information for Seniors, FINRA Investor Alerts and NASAA’s Senior Investor Resource Center.
  3. Encouraging seniors to maintain key personal and financial information in a safe, secure place. This should include an inventory of assets with account numbers, passwords and location of safe-deposit boxes; a list of debts and regular obligations; and a list of professional advisors.

The orginal and updated reports are available on the SEC website. The latter includes a helpful list of resources and agencies on aging that can enhance how advisors work with senior clients.


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