Interest rates are at historically low levels. That means many of your senior clients, who typically live on a fixed income, may be hurting. What better time than right now to warn them of the dangers of risky and complex products promising higher returns.
To that end, the Financial Industry Regulatory Authority (FINRA) has issued an Investor Alert cautioning them about putting assets into products such as structured notes with principal protection, high-yield bonds, floating-rate loan funds and leveraged products.
FINRA’s Investor Alert, “The Grass Isn’t Always Greener–Chasing Return in a Challenging Investment Environment,” was prompted by significant recent inflows into investments like high-yield bond funds, floating-rate loan funds and structured retail products. High-yield bond funds had $75 billion in new sales in 2010. Floating-rate funds grew from $15 billion in 2008 to $60 billion in April, and sales of structured products increased from $33 billion in 2009 to $54 billion in 2010.