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Finra Targets Younger Savers for Investor Education

By Crucial Clips     July 3, 2019
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FINRA 2019 Annual Conference, May. 15, 2019 

RITA RAAGAS DE RAMOS, SPECIAL PROJECTS MANAGER, FINANCIAL ADVISOR IQ: Hi, I'm Rita Raagas De Ramos from Financial Advisor IQ. And with me is Gerri Walsh, Senior Vice President of Investor Education at Finra. One of your main focus is senior investor protection. But what about the generation Xers or the millennials? Are they equally susceptible to harm?

GERRI WALSH, SENIOR VICE PRESIDENT, INVESTOR EDUCATION, FINRA: We care very deeply about younger investors, whether they're Gen Z, which is now starting to show up, or Gen X or the millennials. In fact, last fall, we did a research project with CFA Institute, where we found that very few millennials are investing in the market.

And among those who are, they're concerned about whether they're going to have enough money for retirement. They're not even thinking about retirement and home ownership, the traditional goals that we think about. They're thinking about meeting day-to-day expenses. So that is an area where we really need to work to protect. And the issues that they confront range from paying off bills, paying off student loans, to being able to think about financial independence.

RITA RAAGAS DE RAMOS: Last year, Finra introduced two new rules specifically tailored for senior investors. One is requiring broker dealer firms to ask customers for a trusted contact person. And another one is allowing broker dealer firms to put a hold on disbursements if they feel or believe that there's financial exploitation going on from a third party. What kind of feedback have you received so far from the broker dealer industry? And on the flip side, what impact have you seen from all these initiatives on senior investor protection?

GERRI WALSH: I could talk all day about senior investor protection. But on the new rules, we've gotten really positive feedback from the industry so far. And the rules are voluntary as far as doing a disbursement hold. But what we've heard from the firms is that when they've had to invoke that, it's often when the romance scam is happening, or when somebody has a new boyfriend or girlfriend that comes with them to the office and wants to liquidate the account or suddenly get control of the account. So being able for the firms to have the tool that the disbursement hold provides really is terrific for them. And we get positive feedback.

As far as the trusted contact rule goes, we're also seeing that that's important. And that's not just for senior financial exploitation. That can help anyone. If you happen to be in Europe or South America or Antarctica on a vacation, and something is going awry in your account, the broker having the ability to connect with a trusted contact to find out where you are and whether you made this particular order is really important for your own protection.

But we have gotten feedback from the firms that sometimes the consumers, the investors, don't understand why the firm is asking for this information. They fear that it might give the trusted contact power of attorney powers, which it doesn't. And so we've been working with firms to try to educate consumers, to educate reps, about how important it is to have a trusted contact on the account and also how it actually works.

RITA RAAGAS DE RAMOS: Are there any other groups that you're focused on aside from seniors?

GERRI WALSH: Well, we do focus on millennials. We have a page on our website dedicated to millennial resources. We also think about that low-wage worker who is a pre-investor, if you will, the people who are not yet part of our capital markets, but who could benefit from participating in the market. So we want to make sure that they get the education they need to be able to save and invest for their future.

RITA RAAGAS DE RAMOS: Thank you, Gerri.

GERRI WALSH: Thank you.