As the population ages in the United States, service providers in the financial industry will be forced to grapple with various challenges. Members of the financial industry must understand the aging process in order to carry out their duties as investment advisers and broker-dealers. Michelle Jacko, Managing Partner and CEO of Jacko Law Group, PC, provides an overview of various considerations related to “aging clients from a compliance, operational and practical perspective.”
Aging clients present concerns such as diminished capacity and elder abuse and exploitation. Financial firms were put on notice this year that regulatory bodies will be examining how firms are handling these and other issues involving aging clients. Proposed rules and regulatory guidance has been released that offer insight into what might be expected from a regulatory standpoint regarding the protection of aging clients. For example, FINRA Regulatory Notice 07-43 “. . . addresses firm obligations relating to senior investors and highlights industry practices, suitability concerns, communications with the public (including use of designations and seminars), and dealing with investors with diminished capacity and occurrences of suspected financial abuse.” Firms can also find practical tips to follow when composing policies related to aging clients.
From a regulatory perspective, it is safe to state that firms are expected to develop effective controls for providing service to aging clients. Those tasked with developing a firm’s policies for dealing with senior investors should begin by interviewing financial representatives to determine the issues they face when servicing aging clients. Firms should also be sure to define what constitutes an elderly client to ensure that financial professionals are clear as to when special considerations for suitability reviews should be taken into account.
In addition to providing a case study to illustrate some of the challenges faced by financial firms when providing services to seniors, Michelle Jacko offers several risk management tips that firms can take into account regarding aging clients. The tips include tasks such as developing and documenting a response plan, reviewing investment advisory contracts, summarizing regulatory guidance in an effort to convey the importance of compliance and operational protocols surrounding elderly clients, and more. The implementation of the tips provided by Jacko, will undoubtedly assist firms in creating a culture of compliance surrounding the financial services offered to aging investors.