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May 15, 2016 by |

Alameda County Financial Elder Abuse Attorney: FINRA Rules


New FINRA Rules Aim to Curb Financial Elder Abuse

FINRA fines for the financial industry tripled in 2015, to over $18 million. Many attribute the increased fines to a new focus on Suitability requirements, which are designed to make brokers and financial planners take into account how the specific product they are selling will affect the financial situation of each customer. Rather than just selling expensive products with big commissions, they are obliged to guide their clients in selecting a product that will work with their situation. Brokers that sell unsuitable products, either for a higher commission or from a lack of research or knowledge, might potentially be fined by FINRA or be liable for a civil lawsuit.
Suitability is an important thing for clients to consider before investing in a financial product. Because brokers receive higher commissions and other incentives for selling products that earn a higher rate of return for the company that provides the product, they may try to steer you toward products that benefit be seller more than the buyer. Many products, such as indexed annuities, indexed universal life insurance, and whole life insurance can be incredibly complicated, and even brokers may not fully understand the specifics of what they are selling.

By holding brokers to account when it comes to determining suitability, FINRA is trying to ensure that the expanding elderly population is not taken advantage of by unscrupulous salespeople. In the current low-interest environment, some financial advisors are convincing their clients to invest in riskier products to earn higher rates and justify their commissions. If these investments backfire, FINRA may launch an investigation into the suitability of the products.

Major Sellers of Financial Products such as Whole Life Insurance and Annuities Include:

It’s important for financial advisors to take seriously their duty of thoroughly understanding and investigating products before convincing their clients to but a product. In you believe that you or a loved one may have been the victim of an unsuitable financial products, contact the Evans Law Firm at (415) 441-8669, or by email at Our Alameda County attorneys handle cases of financial elder abuse, investment, annuity, and insurance fraud, long term care insurance, and nursing home abuse.

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