Yesterday, the Investment Industry Regulatory Organization of Canada released a notice providing guidance to Dealer Members on the ever-growing concerns surrounding aging investors. IIROC has outlined the following best practices:
- Be proactive about Powers of Attorney – ask senior clients about the existence of any POAs, and be sure to obtain copies and supporting documents; always reconcile changes with the Know Your Client document.
- Enhance your communications – be meticulous in obtaining client information, and do it often while always using plain language. Talk to your senior clients about POAs and emergency contacts, and be sure to accommodate for those with disabilities.
- Implement policies and procedures – Make sure your representatives are equipped to deal with senior clients, ensure suitability, and establish internal resolution processes. Make sure that clients are encouraged to prepare for the future, while keeping all advertising to senior clients appropriate.
- Know your client AND your product – Maintain formal policies and procedures for due diligence, and ensure that your representatives satisfy their requirements to verify their clients' circumstances, and understand the features and risks of any recommended securities.
- Understand the unique suitability factors – Highlight those suitability factors that are most pertinent to senior investors, such as time horizon, investment objectives, and supervision.
Dealer Members also need to be alive to the issue of diminished capacity, both by encouraging senior clients to provide an emergency contact, and by temporarily holding an account where exploitation and/or capacity issues are suspected.