What's wrong in this picture.   Mr. Investor’s Daughter opened an account with Ms. Securities Professional over the phone.  Daughter informed Ms. Securities Professional that she was nearing retirement and wanted to preserve her nest egg.  Ms. Securities Professional asked Daughter to provide financial information, then filled in the remainder of the new account form herself.  Under investment objectives, Ms. Securities Professional put “speculative,” and proceeded to purchase speculative stocks in Daughter’s account.

In 2008, firms broadened their conversations with investors by covering the following topics:

• Documenting the response to lifestyle questions, such as:  (i) “When do you plan to retire?” (ii) “How much money do you need to retire in the fashion you want?” (iii) “Do you have any other issues or expenses that we should contemplate as you retire?” (iv) “Do you have children or grandchildren who are dependent on you financially?”  (v) “Do you have a will and a financial power of attorney?”

• Requiring in-person meetings with the investor to fill out the N/A Form - helping to ensure that all investor information is accurate and up-to-date.

• Encouraging the investor to bring a trusted family member or trusted individual to meetings.

• Requiring frequent updates of new account information - e.g., annually.

For further details, click onto:  [ SEC PR 10-147, 8/13 ];  and, [ The 2010 Addendum ];  and  [ The 2008 Report ]

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The above info came from "Protecting Senior Investors:  Compliance, Supervisory and Other Practices Used by Financial Services Firms in Serving Senior Investors," guidelines from the staffs of SEC's OCIE, FINRA and NASAA - published in 2008, updated in 2010. 

Here's what C-I is focusing on.  Next posting deals with #6.

1. Getting started: how firms are thinking of ways to remodel their supervisory and compliance structures to meet the changing needs of senior investors.
2. Communicating effectively with senior investors.
3. Training and educating firm employees on senior-specific issues (such as how to identify signs of diminished     capacity and elder abuse).  
4. Establishing an internal process for escalating issues and taking next steps. 
   
5. Advertising and marketing to senior investors.
6. Obtaining information at account opening.
7. Conducting senior-focused supervision, surveillance and compliance reviews.