Seasoned investors might find reduced opportunities to receive free lunches and other treats. But they will gain better and swifter legal protection.
After decades of bearing the brunt of most financial scams, senior Americans are receiving help. Scams that involve possible fraud against senior investors will be on the investigative fast track.
The Financial Industry Regulatory Authority (FINRA) said it will bring cases and prosecutions as quickly as possible. When a senior is involved in a case, the investigators should complete their work within four months. If the investigation reveals enforcement is warranted, cases with senior victims move to the top of the agenda of enforcement officials.
FINRA is making seniors a priority because an investment loss is more devastating to someone who no longer is working and is living off a nest egg. A senior could be more vulnerable because infirmities and medication could make it more difficult to supervise or understand what an adviser is doing with an account. Also, the aging Baby Boomers have significant investment portfolios that are targeted by perpetrators, and FINRA says the incidents are becoming more frequent. As retirement assets shifted from employer-managed plans to self-directed plans such as 401(k)s, an increasing amount of wealth shifted to the hands of inexperienced investors.
A surprising adjunct of this effort is the types of cases drawing the regulators’ focus.
FINRA says it is particularly interested in instances when financial products are addressed at “free lunch” seminars. While attracting potential clients to hear a sales pitch by offering a free meal is a legitimate marketing method, regulators believe it is abused. They are on the lookout for seminars that feature high-pressure sales talks.
Most financial professionals who legitimately use free seminars to market their services present valuable, free information and offer to set future appointments for attendees interested in more detail. This approach builds the presenters’ credibility and helps attendees determine if the service or product might be appropriate for them. A seminar or workshop should not be a high pressure sales pitch or be accompanied by a message that a fast decision is required.
Other targets of the regulators are financial advisers and sales people who falsely state or imply they have credentials that provided special training for working with older clients. There are a number of advisers who tout credentials that are made up or that did not require any special training or education related to the issues of the elderly.
While seniors might have fewer free lunches available to them, the good news is that regulators will focus on seemingly legitimate financial advisors who are taking advantage of their clients, and that the cases will receive enforcement priority.