No matter what you do to protect yourself, there are risks all around. Over the years that I have defended brokers, I have found that one of the greatest liability risks is the way in which brokers have managed their elderly clients.
With the Baby Boomers advancing in age, brokers are bound to have a more mature client base. At the same time, FINRA is taking a harder look at the senior community.
FINRA is in the process of gathering data from firms regarding the products they market to seniors and the percentage of revenue derived from them. The purpose of this analysis is for FINRA to better understand the financial world and to take steps to ensure proper supervision of sales to this segment of society.
As products become more sophisticated, you should expect regulators to take a harder look at those being sold to seniors, who are especially vulnerable to high yield, high risk products. So how best to manage a practice that includes an aging customer base.
The key to risk avoidance is heightened due diligence when selling products to your elder clients. Make sure these clients fully understand and appreciate the investment vehicle. Keep it simple; these people do not need all of the bells and whistles. Avoid the risk.