On May 31st, 2016 the Investment Industry Regulatory Organization of Canada (“IIROC”) released a Notice titled “Guidance on compliance and supervisory issues when dealing with senior clients” (the “Notice”). The Notice outlined the following guidance regarding best practices:
Powers of attorney
Ask senior clients about whether a POA exists and if so, secure a copy of the document and any supporting documents. Diligently record changes over time. If the client does not have a POA, discuss the importance and benefits of a POA.
Further, the IIROC reminds practitioners to remain aware of any potential red flags that arise during the creation or modification of a POA, such as an apparent lack of connection between the client and the person being granted the POA.
Effective communication with senior clients is imperative. In order to create an effective, ongoing client relationship, frequent contact is necessary. Practitioners should remain informed about the client’s needs, financial status, and health. Ensure conversations are in plain language and that documents created use larger font. Document all material discussions.
Policies and procedures
Use policies and procedures to ensure that representatives interacting with senior clients are aware and educated on issues common to senior clients. Establish a system that allows representatives to escalate issues should they occur. Policies should ensure that investments and products meet the senior client’s needs. Representatives should encourage senior clients to plan for the future.
Product due diligence
Ensure that due diligence is being completed by representatives before giving advice to senior clients. Risks common to senior clients should be specifically considered. Practitioners should verify the client’s identity, circumstances, and understanding of risk.
Certain common characteristics and issues affect the investment suitablility for senior clients. Factors include time horizon and investment objectives. Supervisory review practices should be used to ensure that investments made by senior clients are suitable for senior clients’ needs.
Trusted contact persons
Practitioners should remain aware of the possibility of diminished capacity. Discuss establishing a “trusted contact person” who is not involved in making financial decisions. Policies should outline when the trusted contact person will be contacted. Practitioners should obtain permission from senior clients to place a temporary hold on client accounts if financial exploitation or diminished capacity is suspected.