Finra zeroing in on practices involved in sales to seniors

Apr 14, 2013 @ 8:31 am

By Mark Schoeff Jr.

The Financial Industry Regulatory Authority Inc. is gathering data from firms regarding the products they market to seniors, the percentage of revenue they derive from those sales and the designations they are using to market themselves to older Americans.

“It has all of our attention, and it's somewhere where you'll see regulators continue to focus,” Susan Axelrod, Finra's executive vice president for member regulation sales practices, said last Tuesday during a compliance conference at the Securities and Exchange Commission.


Seniors are especially vulnerable to offers of yield-chasing and high-risk products, Finra chief executive Richard G. Ketchum said.

“These are people who have been particularly impacted by reductions in interest rates because the cash coming from their investments often is a significant supplement to whatever 401(k), pensions and Social Security they have,” he said.

Participating in a panel at the event, Mercer Bullard, president of Fund Democracy Inc. and professor of law at the University of Mississippi, said that the United States is on the verge of a “senior crisis” posed by the risk of seniors' outliving their assets and their declining ability to manage their money.

“What we're looking at is a massive increase in senior misery,” Mr. Bullard told the audience.


The increasing sophistication of financial products, combined with longer life expectancy, is creating an environment in which fraud can thrive, according to Mr. Bullard.

“There's probably someday going to be a good argument that anyone over 75 shouldn't be sold anything that is outside of a predetermined list of fairly simple funds, meaning low volatility and low risk,” he said in an interview. “Otherwise, we're going to see millions of seniors living on Social Security who are not expecting that to be their standard of living.”


What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video


Top questions surrounding future of DOL fiduciary rule

Reporter Greg Iacurci and managing editor Christina Nelson discuss the biggest uncertainties springing from the Fifth Circuit Court of Appeals' decision to vacate the regulation.

Latest news & opinion

The 401(k) robo-revolution is here

Could human advisers be displaced as digital-advice firms use technology to deliver services to plan sponsors and participants?

SEC forging ahead on fiduciary rule despite DOL rule decision in 5th Circuit

Chairman Jay Clayton says 'the sooner the better' when asked when an SEC fiduciary rule will be ready.

What the next market downturn means for small RIAs

Firms that have enjoyed AUM growth because of the runup in stocks may find it hard to adjust to declining revenues if the market suffers a major correction.

DOL fiduciary rule likely to live on despite appeals court loss

Future developments will hinge on whether the Labor Department continues the fight to remake the regulation its own way.

DOL fiduciary rule: Industry reacts to Fifth Circuit ruling

Groups on both sides of the fiduciary debate had plenty to say.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print