If the recent National Senior Investor Initiative of the SEC and FINRA taught us anything, it was the tremendous importance to know your customers. This takes on more significance when you are working with seniors.
You may ask why does “knowing your customer” take on any more significance for these clients. For one, an investor’s goals, objectives and tolerance for risk may change over time. What may have been suitable when your client was in her thirties may not when the same client is in her 60s.
By the same token, as our society grays, there may be more issues with cognitive impairment. Getting in front of your clients as they age will then take on an even bigger significance, especially if you detect cognitive issues.
Best practices would suggest that you have a face-to-face meeting with your clients at least once a year. At those meetings, you should undertake that know your customer analysis as if the client was new to the firm. Although this may seem like needless work, there is a benefit.
First, any time you are in front of your client you have the opportunity to generate new business. Second, it shows your clients, particularly as they age, that you have a vested interest in them as people, than just AUM. Third, it provides you with a possible risk avoidance tool. The more you know, the less likely you will be faced with a suitability claim in the future.
Take the time every year to make sure you still know your customer. Otherwise, place yourself at risk of being a target in the future. The choice is yours.
* photo from freedigitalphotos.net