FINRA views the protection of senior investors, as well as baby boomers who are retired or approaching retirement, as a top priority. Because a large number of American investors are approaching retirement and control a substantial portion of investment assets, FINRA encourages firms to review and, where warranted, enhance their policies, procedures and practices, in light of the special issues common to many senior investors.
For example, a firm's procedures and controls should take into consideration the age and life stage (whether pre-retired, semi-retired or retired) of their customers. Of particular concern to FINRA is the suitability of recommendations to senior investors, communications targeting older investors, and potentially abusive or unscrupulous sales practices or fraudulent activities targeting senior investors.
FINRA’s exams focus on a broad range of topics, including:
- the types of securities and suitability of securities sold to senior investors
- training of firm representatives with regard to senior specific issues and how firms address issues relating to aging (e.g., diminished capacity and elder financial abuse or exploitation);
- use of senior designations
- firms’ marketing and communications to senior investors
- types of customer account information required to open accounts for senior investors
- disclosures provided to senior investors
- complaints filed by senior investors and the ways firms track those complaints
- supervision of registered representatives as they interact with senior investors
Securities Helpline for Seniors
In 2015, FINRA launched the toll-free FINRA Securities Helpline for Seniors® to provide older investors with a supportive place to get assistance from knowledgeable FINRA staff related to concerns they have with their brokerage accounts and investments.
Senior investors can call FINRA's new toll-free FINRA Securities Helpline for Seniors (844-57-HELPS or 844-574-3577) from 9:00 a.m. – 5:00 p.m. ET, Monday through Friday, and get neutral, knowledgeable assistance with:
- understanding how to review investment portfolios or account statements;
- concerns about the handling of a brokerage account; and
- investor tools and resources from FINRA, including BrokerCheck®.
The Report on the FINRA Securities Helpline for Seniors highlights important lessons for investors gleaned from calls and lays out effective practices for firms to consider when working with senior investors. The FINRA Securities Helpline for Seniors has helped investors recover $4.3 million in voluntary reimbursements from firms since its launch on April 20, 2015.
National Senior Investor Initiative
In 2013, FINRA and the SEC initiated an assessment of firms' policies and practices regarding their senior investor clients. This on-going effort focuses on suitability, disclosures, misrepresentation, advertising, pricing, compensation and supervision relating to recommended products and services.
The assessment also reviews firm’s written supervisory procedures to determine whether firms have placed adequate controls to identify potential financial abuse of senior investors or individuals with diminished mental capacity. We have found, among other things, that age plays a role in many firms' supervisory processes.
In November 2011, FINRA issued Regulatory Notice 11-52 addressing the use of certifications and designations that imply expertise or specialty in advising senior investors (senior designations). The notice outlines findings from a survey of firms which focused on the prevalence of senior designation usage, the extent to which particular senior designations were used or prohibited, and the supervisory systems in place regarding senior designations. It also highlights practices used by firms regarding the use of senior designations. FINRA encourages firms to consider strengthening their supervisory procedures by implementing, as appropriate to their business, the sound practices outlined in this notice.
Use FINRA's Professional Designations tool to look up requirements to earn and maintain designations, including senior designations.
During 2006 and 2007, FINRA conducted a regulatory sweep, reviewing sales activities and other practices regarding "free lunch" seminars. FINRA collaborated with the SEC and the North American Securities Administrators Association (NASAA) and the New York Stock Exchange Member Regulation Inc. (now combined as FINRA) in completing this effort.
The results of these examinations led regulators to conclude that financial services firms should take steps to supervise sales seminars more closely, including reviewing and approving advertisements and sales materials for accuracy.
In addition, because seniors are pursued to attend sales seminars, firms should ensure that attendees understand that these are sales seminars intended to result in the sales of financial products. Seniors also should be informed that the seminars may be sponsored by another company with a financial interest in product sales.
Further, firms should ensure that the investment recommendations made during the sales seminars or during follow-up meetings are consistent with seniors' investment objectives and other financial interests. The report summarizing this effort was published in September of 2007.
FINRA Investor Education Foundation
Since its establishment in 2003, the FINRA Investor Education Foundation has played a central role in FINRA's senior investor education and outreach efforts. The FINRA Foundation employs national, state and grassroots partnerships to develop and distribute fraud prevention resources, conduct outreach, and train consumers, law enforcement professionals and victim advocates.
Since 2008, the FINRA Foundation has touched hundreds of thousands of consumers with essential fraud prevention messages, trained more than 900 law enforcement officers from over 400 agencies, developed and nationally distributed two public television documentaries, and equipped thousands more stakeholders to fight fraud in communities nationwide.
Moreover, the FINRA Foundation continues to engage in research to understand fraud prevalence, the mechanics and impact of investment fraud, if and why older consumers are more heavily victimized, and behavioral and neurological risk factors.