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Important Tips for Senior Investors

FINRA (Financial Industry Regulatory Authority) Rule 1250(b) requires all broker-dealers to provide continuing education for their representatives, and their training plans must be appropriate for all business activities associated with the firm. This rule requires training programs, at a minimum, to cover the following with respect to their securities recommendations, services, and strategies: general investment features and associated risk factors, suitability and sales practice concerns, and applicable regulatory requirements. However, there is no requirement that a firm’s training address issues specific to senior investors.  As a result, it is important for you to ensure that when your account representative is making recommendations that he/she is taking into consideration that you are a “senior investor”.

Investment needs change as investors age. Not all products are suitable for the same type of investors. Therefore, senior investors should discuss current employment, primary expenses, sources of income, fixed or anticipated expenses, liquidity, and investment goals.  In addition, in a low interest rate environment, firms may be recommending non-traditional investments to supplement the income streams of senior investors. As a result, firms may make more potentially unsuitable recommendations for non-traditional securities such as variable annuities, structured products, and REITs than for more traditional securities such as open-end mutual funds, equities, and fixed income investments. Firms must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the investor based on the information obtained through reasonable diligence into an individual’s investment profile. Accordingly, don’t be afraid to ask questions about suitability for your particular circumstances.

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