Corporate & Securities Law

Senior investors, as well as Baby Boomers who are retired or who are approaching retirement, should take some comfort from a recent notice to financial services firms, Regulatory Notice 07-43.  The Financial Industry Regulatory Authority (FINRA) states that the purpose of the notice is "to urge firms to review and, when appropriate, enhance their policies and procedures for complying with FINRA sales practice rules, as well as other applicable laws, regulations and ethical principles, in light of the special issues that are common to many senior investors."

Why is FINRA concerned?  The concern stems from demographics - by 2030, almost 1 out of every 5 Americans will be 65 years old or older.  Additionally, the concern is that retirees will live longer, yet fewer and fewer of them will be able to rely on traditional corporate pension plans to fund their retirement.  Therefore, FINRA states that  "the financial decisions made by those who are at or nearing retirement are more important than ever before."

Moreover, FINRA emphasizes that although it does not have "special rules" in place for seniors/retirees, financial services firms especially must be careful when dealing with seniors/retirees.  In executing their duties, the notice provides that "age and life stage (whether pre-retired, semi-retired or retired) can be important factors, and firms should make sure that the procedures they have in place take these considerations into account where appropriate."  Suitability of recommendations and communications aimed at older investors are "of particular concern."  Let's examine FINRA's guidance regarding suitability of investment recommendations...

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