By Nick Bates, Questar Branch Office Manager at Ann Arbor Annuity Exchange
We have all seen the statistics on the massive number of baby boomers retiring on a daily basis in our country, and it has been a great opportunity for financial professionals (FPs) to provide them with products that can help meet some of their needs such as income and safety. Well guess who else has seen those same statistics: FINRA, the SEC, and other self-regulatory organizations (SROs).
Over the last several years, sales to seniors have become a major focus of the SROs. This has led to increased suitability requirements for clients over the age of 65 and even continuing education requirements that are solely dedicated to this topic.
Often we read articles on topics in our industry, but the realization does not hit us until it affects us on an individual basis. This exact thing happened to me this past year while performing my annual supervisory interviews with the registered representatives (RRs) that report to me under a FINRA supervision structure. Usually the questions I ask from year to year are very similar and almost identical, so anything that is newly added or changed jumps out at me. This year I noticed many more in-depth questions on sales to seniors.
One new question that caught my attention was:
When working with senior investors, do you understand that additional considerations may be necessary when determining suitable investments, such as health changes, liquidity need and whether the client has diminished capacity?
This was an eye-opening question to me, showing that my RRs need to understand that there is increasing scrutiny in our industry of sales to senior investors. This sharpened focus includes LIMRA creating specific online training programs for agents on detecting elder financial abuse. Also, most broker/dealers (B/Ds) have added training on sales to seniors in their annual continuing education courses that must be completed every year by their RRs to maintain affiliation with the B/D.
Two things jumped out at me in this question: health changes and diminished capacity. We are all aware that a sale to a client needs to be suitable and that liquidity is a major concern because of the long-term nature of some investments. However, some RRs may not be thinking about the extent of their responsibilities in keeping an eye out for health changes and diminished capacity when making product or strategy recommendations.
This increased scrutiny on sales to seniors only emphasizes the need for taking extra time in the sales process to learn everything you can not only about your client’s financial situation but also their health situation. Knowing everything you can about your client has never been more important than it is right now.
If you would like to discuss more about considerations in sales to seniors, please give Ann Arbor Annuity Exchange a call at 800.321.3924.
Nick Bates | Branch Office Manager
Questar Capital Corporation Branch Office at AAAE
Ph: 800.321.3924 x121 | Dir: 734.786.6121
Securities offered through Questar Capital Corporation (QCC). Member FINRA/SIPC. Advisory services offered through Questar Asset Management, a registered investment advisor. Ann Arbor Annuity Exchange is an affiliate of QCC.
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