By Ben Dell’Orto, Spring 2018 IAC Student Intern
The International Organization of Securities Commissions (IOSCO) recently released a report on the threats specific to senior investors. The report followed the analysis of risks and causes particular to older people with an analysis of current regulations and recommended sound practices for regulators.
The report notes that many countries share the same suitability requirements as FINRA in the US, though not many countries have special protections for older investors. FINRA might be special in that it includes “age” as a factor, while other countries such as Spain simply say “in case of the provision of portfolio management and investment advice, intermediaries should take into account the knowledge, experience, financial situation and risk profile of the investor.” “Age” and “experience” are overlapping-but-different concerns, and it is important to note the difference. The SEC and FINRA have also added new regulations to protect older individuals.
Japan is noted as doing the most to begin adjusting its standards. The Financial Services Agency, Government of Japan has added guidelines which note “that senior investors’ ability to make investment decisions could deteriorate due to physical decline or be temporarily impaired even when they have ample investment experience.” Meanwhile Quebec put a deadline late last year for public organizations to create a “framework agreement concerning maltreatment of seniors.”
One practice recommended by the report is educational programs specifically targeted toward senior investors. As examples, it points to educational workshops in Singapore on retirement and estate planning and the senior-focused MoneySmart website in Australia.
The report also recommends developing “senior-focused” expertise within existing programs. The report points toward FINRA’s Helpline for Seniors, which provides senior-focused assistance. Portugal has launched an initiative to encourage seniors to reach out to its investment department through a phone line, postal resource and personal meetings. Also suggested are guidelines and training programs for the individuals charged with assisting senior investors. For instance, Singapore encourages individuals above 62, with limited education, and/or with limited English skills to bring a trusted person to accompany them when receiving investment advice.
Finally, the report recommends further research to understand the complexities of the issue.
Next, the recommendations for financial service providers.