Compliance February 8, 2008

Regulators to Share Best Practices in Working with Senior Investors

Securities regulators have launched an initiative to identify effective practices used by financial services firms in dealing with senior investors.
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The Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) said they will solicit input from “all interested parties’ identifying strong supervisory, compliance, and other practices used by financial services firms serving seniors.

The regulators will publish their findings on best practices in the following areas:

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  • marketing and advertising to seniors;
  • account opening;
  • product and account review;
  • ongoing review of the relationship and appropriateness of products;
  • discerning and meeting the changing needs of customers as they age;
  • surveillance and compliance reviews; and
  • training for firm employees.

According to an announcement about the initiative, the goal of the initiative is not to impose new regulatory requirements, but to help firms better meet their current obligations to, and more generally serve, clients who are seniors.

The current effort is part of a coordinated national initiative to protect seniors from investment fraud and sales of unsuitable securities launched in May 2006. The national initiative has several components, including targeted examinations, enforcement of the securities laws in cases of fraud against seniors, and active investor education and outreach.

FINRA last year launched a free, instructional webcast regarding compliance obligations advisers have when working with senior customers (see FINRA Webcast Offers Insights on Working with Seniors), one month after the group announced two major regulatory sweeps intended to ensure that securities firms adhere to appropriate sales practices when dealing with seniors and individuals nearing retirement (see FINRA to Check Securities Firms’ Sales Practices with Seniors).

Products February 8, 2008

Newkirk Helps Plans with Notification Requirements

Defined contribution plan communications provider Newkirk has unveiled its Automatic Enrollment “SmartSingle” employee communications material.
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The new offering is a personalized communication designed to satisfy Department of Labor and Internal Revenue Service participant notice requirements for Qualified Automatic Contribution Arrangements (QACA), Eligible Automatic Contribution Arrangements (EACA), and Qualified Default Investment Alternatives (QDIA).

The automatic enrollment targeted communication includes:

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  • An explanation of how automatic enrollment and automatic deferral increase provisions work,
  • An explanation of the employer match, and
  • A participant-specific illustration of how deferrals and employer match contribute to a participant’s retirement nest egg.

The full-color, four-page communication can be mailed directly to participants or bulk-shipped to plan sponsors for redistribution to newly-eligible, automatically-enrolled participants.

“[T]his communication is much more than just a notice. It provides participant-specific illustrations of the impact of the deferrals and other information about the plan’s operation. And it presents the sponsor and the provider in a most attractive light,” noted Pete Newkirk, President of Newkirk, in a press release.

A demonstration is available here.

More information about Newkirk’s services is at www.newkirk.com.

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