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.
Financial Exploitation of Seniors
With the aging of the U.S. population, financial exploitation of seniors is a serious and growing problem. FINRA’s Securities Helpline for Seniors® has highlighted issues relating to financial exploitation of this group of investors, including the need for members to be able to more quickly and effectively address suspected financial exploitation of seniors and other specified adults.
FINRA rules provide members with ways to respond to situations in which they have a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted or will be attempted. Members can better protect their customers from financial exploitation if they have the ability to contact a customer’s designated trusted contact person and, when appropriate, place a temporary hold on a disbursement of funds or securities from a customer’s account.
- FINRA Rule 4512 (Customer Account Information) requires members to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer’s account or when updating account information for a non-institutional account. The trusted contact person is intended to be a resource for the member in administering the customer’s account, protecting assets and responding to possible financial exploitation.
- FINRA Rule 2165 (Financial Exploitation of Specified Adults) permits, under FINRA rules, a member that reasonably believes that financial exploitation has occurred, is occurring, has been attempted or will be attempted to place a temporary hold on the disbursement of funds or securities from the account of a “specified adult” customer. Specified adults include a natural person age 65 and older or a natural person age 18 and older who the member reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.
- FAQ Regarding FINRA Rules Relating to Financial Exploitation of Seniors
- Regulatory Notice 17-11 (SEC Approves Rules Relating to Financial Exploitation of Seniors)
FINRA’s exams focus on a broad range of topics relating to the protection of senior investors, 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 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 the contributions of the Helpline over the last five years and lays out effective practices for firms’ senior investor protection programs.
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.
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 9,400 professionals (including law enforcement officers, social workers and victim advocates) from thousands of different 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.
FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see Interpreting the Rules for more information.
- FINRA Requests Comment on Rules and Issues Relating to Senior Investors
- SEC Approves Rules Relating to Financial Exploitation of Seniors
- FINRA Provides Guidance on Firm Responsibilities for Sales of Pension Income Stream Products
- FINRA Reminds Firms of Their Obligations Regarding the Supervision of Registered Persons Using Senior Designations
- FINRA Reminds Firms of Their Obligations With Variable Life Settlement Activities
- FINRA Reminds Firms of Their Obligations Relating to Senior Investors and Highlights Industry Practices to Serve these Customers
- PodcastA broker-deal firm’s anti-money laundering efforts may overlap with any number of other regulatory concerns. On this episode, the second in a two-part series, we’re looking at how AML may overlap with a firm’s efforts to protect senior investors from exploitation and fraud.November 10, 2020
- Virtual Conference PanelToday, social distancing is an important component of public health. However the isolation that results has important implications for financial decision making, fraud vulnerability, and cognition among older investors. Join this panel for a discussion of emerging research on these topics and steps you can take to further protect your clients.June 15, 2020
- Protecting Senior Investors 2015-2020
Overview of FINRA Senior Exploitation Rules
The FINRA Senior Exploitation Rules provide firms with the tools to protect senior investors and help firms address risks relating to possible financial exploitation. FINRA Rule 4512 (Customer Account Information) requires firms to make reasonable efforts to obtain the name of and contact information for a trusted contact person upon the opening of a non-institutional customer’s account or when updating account information for an existing non-institutional customer account.April 30, 2020
- Report / Study
Seniors make up an increasingly large share of the American population1 and hold higher levels of wealth than other generations. These factors, among others, make seniors an attractive target for financial exploitation, with evidence suggesting that such exploitation has been increasing in terms of both scope and magnitude.2 Sadly, while seniors sometimes fall victim to financial exploitation by strangers, they are often exploited by individuals they know and trust, such as family members or caregivers.April 30, 2020
- Protecting Senior Investors 2015-2020
FINRA launched the Helpline on April 20, 2015 to provide investors with access to specially trained FINRA staff who can assist senior and vulnerable adult investors with questions or concerns about their brokerage accounts and investments. As of December 31, 2019,5 the Helpline has received over 18,000 calls from all 50 states and several countries. Helpline callers range in age from 17 to 102, with the majority of calls coming directly from seniors (with an average age of 70).April 30, 2020
- Protecting Senior Investors 2015-2020
FINRA ResourcesApril 30, 2020
- Protecting Senior Investors 2015-2020
In 2019, FINRA assessed firms’ senior investor protection programs, including their implementation of the FINRA Senior Exploitation Rules. In particular, FINRA evaluated how firms addressed risks relating to senior investors in their policies and procedures; gathered trusted contact person information; developed training relating to senior investors; implemented systems to escalate financial exploitation concerns; placed holds on disbursements in customer accounts; conducted senior investor exploitation investigations; and reported instances of financial exploitation.April 22, 2020
- PodcastFINRA is committed to the protection of senior investors and other vulnerable adults. That’s why FINRA launched the Securities Helpline for Seniors. On this episode, we hear how the Helpline handles calls, frequent areas of concern and how the Helpline has evolved over the five years since its launch.April 14, 2020
- GuidanceMay 19, 2019
- PodcastSenior investors may have unique needs that elevate the need for expedited attention with securities brokerage concerns. For three years, FINRA’s Securities Helpline for Seniors has been working to address those needs. Here’s how.May 01, 2018
- FAQFrequently Asked Questions Regarding FINRA Rules Relating to Financial Exploitation of Senior InvestorsIn February 2017, the SEC approved: (1) the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; and (2) amendments to FINRA Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person (“trusted contact”) for a customer’s account. New Rule 2165 and the amendments to Rule 4512 become effective February 5, 2018.January 03, 2018
- Report / Study
One of the primary missions of the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) is the protection of investors, of which senior investors are an important and growing subset. As part of a collaborative effort, staff of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”)1 and FINRA (collectively, the “staff”) conducted 44 examinations of broker-dealers in 2013 that focused on how firms conduct business with senior investors as they prepare for and enter into retirement.March 15, 2015
- Report / StudyToday in the United States, nearly 40 million people are age 65 and older. This number is expected to more than double to 89 million by 2050.November 12, 2011
- Interpretive LetterNASD Rule 2210 - Communications with the PublicSeptember 28, 2007
- Report / StudyProtecting Senior Investors: Report of Examination of Securities Firms Providing "Free Lunch" Sales Seminars
With the aging of the baby boom generation, a growing number of our nation’s investors are at or near retirement age. Indeed, data presented at the first “Seniors Summit” held by the Securities and Exchange Commission (SEC) in July 2006 indicated that 75% of the nation’s consumer financial assets, valued at $16 trillion, are held by households headed by someone who is 50 or older. Within the next 20 years, 75 million people will have celebrated their 60th birthday.September 10, 2007
- April 30, 2020
- FINRA Bars Ami Forte and Charles Lawrence for Their Roles in Churning Accounts of Elderly Client with DementiaOctober 21, 2019
- NASAA, SEC and FINRA Issue Senior Safe Act Fact Sheet to Help Promote Greater Reporting of Suspected Senior Financial ExploitationMay 23, 2019
- February 05, 2018
- March 30, 2017
- Investor EducationThe protection of senior investors has always been a top priority for the Financial Industry Regulatory Authority (FINRA). As part of this ongoing effort, FINRA adopted rules earlier this year that allow brokers to take steps to protect seniors and other specified adults.
- Investor EducationSenior Citizen’s Day, which is August 21, gives us the opportunity to pay tribute to the many contributions seniors make to their communities—and to bring awareness to issues of particular importance to America’s older citizens. One of those issues is investor protection. Here are four resources from FINRA that seniors can use every day of the year.
- Investor EducationNew research suggests that seniors may be particularly vulnerable to the effects of heightened emotions on decision making. Researchers at the Stanford Center on Longevity, FINRA Foundation and AARP found that inducing emotions, such as excitement and anger, in older adults increased their intention to buy falsely advertised items.
- Investor AlertFINRA is publishing this Alert to warn investors not to send money or provide personal information associated with a widespread IRS impersonation scam timed to coincide with the October 15 deadline for anyone who filed a federal tax extension last April.
- Investor EducationA toll-free number that senior investors can call to get assistance from FINRA or raise concerns about issues with brokerage accounts and investments.
- Investor AlertLately, more and more seniors are hearing about opportunities to sell their existing life insurance for cash in transactions known as life settlements. A life settlement, or senior settlement, as they are sometimes called, involves selling an existing life insurance policy to a third party--a person or an entity other than the company that issued the policy--for more than the policy's cash surrender value, but less than the net death benefit.