By Oren Bossin and Megan Garufi As more baby boomers are reaching retirement age in an environment where conservative investments are earning historically low yields, a new report has been released providing further guidance for the upcoming year. The focus? Whether broker-dealers are recommending or offering other riskier investment choices that could provide higher yields.
The National Senior Investor Initiative Report comes on the heels of a January release of examination priorities from the SEC. This new report – a collaboration between the SEC and FINRA – outlines the risks and regulatory requirements associated with the upcoming examination focus, as well as findings from its most recent examinations.
Here are some highlights from the report:
Securities Purchased by Senior Investors • Senior investors need to be fully informed of features, potential risks, and returns, for any securities they are purchasing
Use of Senior Designations • Firms allowing use of senior designations should have safeguards in place against possible misuse of those designations
Account Documentation • Customer account information should be furnished to customers within 30 days of opening an account and at least every 36 months thereafter
Suitability • Investments in non-traditional investments should be supported by documentation to show customer awareness of knowledge of the risks specific to those investments
Disclosures • Firms should be aware of the necessary disclosure requirements (to customers) for special products