In September 2020, the FINRA Investor Education Foundation published a study, "Does Overconfidence Increase Financial Risk Taking in Older Age?" that is based on a surveys completed by 1,200 adults. Financial literacy was lowest among the oldest adults in the study; however, the confidence in financial knowledge was similar across all ages. The study suggests that overconfidence may contribute to risky financial behavior. The detailed report provides a number of useful insights for broker-dealers and advisers, suggesting, for example, the benefits that may be associated with devoting additional time to understanding financial literacy among clients, spending more time addressing portfolio or investment risk when updating client information, and undertaking more educational outreach with older investors.

In October 2020, FINRA proposed amendments to Rule 2165 on Financial Exploitation of Specified Adults. In Regulatory Notice 20-34, FINRA describes the retrospective review and comments relating to senior issues. Rule 2165 allows a FINRA member firm to place a temporary hold on a disbursement of funds or securities from the account of a "specified adult" customer when the member firm believes that the customer is experiencing financial exploitation. The safe harbor under Rule 2165 allows a firm to place a temporary hold for up to 25 business days to the extent that specified criteria are satisfied. FINRA proposes to amend the rule to permit extension of the temporary hold for an additional 30 business-day period if the incident has been reported to a state agency or to a court. FINRA also proposes to extend the rule to allow for a hold on securities transactions subject to safeguards. The comment period expires on December 4, 2020.

Originally published in REVERSEinquiries: Volume 3, Issue 9.
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