These 2 New National Rules Help Guard the Savings of Seniors

Couple meeting with advisor.
Photo by wavebreakmedia / Shutterstock.com

Brokerage firms are now better equipped to help protect seniors and other investors who may be at risk of financial exploitation.

The Financial Industry Regulatory Authority has created two new rules that FINRA describes as “the first uniform, national standards to protect senior investors.” The changes went into effect in February.

The rules

Firms governed by FINRA are now:

  1. Required to make an effort to obtain the name and contact information of a trusted contact person for a customer’s account. FINRA says the trusted contact person “is intended to be a resource for firms in handling customer accounts, protecting assets and responding to possible financial exploitation of any vulnerable investors.”
  2. Permitted to put a temporary hold on outgoing funds or securities from a customer’s account if financial exploitation is suspected. The hold is designed to give firms time to investigate their suspicion — such as by contacting the customer or the customer’s trusted contact — or, if appropriate, law enforcement or adult protective services.

FINRA describes the second rule as “a critical measure” because of how hard it can be for investors to recover their assets once a firm has unwittingly released funds or securities to fraudsters.

The caveat

While these changes are two steps in the right direction, it’s important to remember that only the types of firms overseen by FINRA are beholden to these rules.

FINRA is what’s known as a self-regulatory organization. It’s not a government agency but is authorized by Congress to oversee the brokerage industry — brokerage firms and their employees who are technically known as brokers or broker-dealers.

Basically, FINRA oversees firms and people who sell securities in the U.S. Some securities salespeople also describe themselves as financial advisers.

Resources for investors

You should be familiar with FINRA as the entity that provides two fantastic free resources to investors:

I’ve used both resources many times to vet financial advisers and mutual funds. I recommend that you get to know them, too.

What’s your take on FINRA’s new rules? Share your thoughts below or on Facebook.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
The Annuity Everyone Needs — and Anybody Can Get
The Annuity Everyone Needs — and Anybody Can Get

This simple strategy can put more money in your pocket during retirement.

Replace These 8 Things — for Your Health and Your Budget
Replace These 8 Things — for Your Health and Your Budget

Being frugal isn’t smart if you put off replacing these things. Waiting too long can cost money or even endanger your health.

How to Invest in Real Estate for as Little as $500
How to Invest in Real Estate for as Little as $500

If stock market volatility has you looking for other investment options, here’s a way to diversify — even if you don’t have tons of money.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Comments

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.