Diminished capacity is a concern when it comes to senior investors, but it turns out it’s also a concern for aging advisors.
At the 2019 Finra Senior Investor Protection Conference in Washington, D.C. on Tuesday, Finra CEO and President Robert Cook was asked how the SRO is addressing concerns of aging advisors with diminished capacity.
Cook said the question was an “interesting one.”
“It’s obviously one [concern] we’re aware of and sensitive to the demographics of the advisor. The registered rep community is clearly getting older,” Cook said.
“It’s something where we had not issued formal guidance, of course, but we do talk to firms about it and offer suggestions or ideas where we can, and also learn how they’re approaching [this issue]. And I think it’s something we all have to think about with sensitivity to the complexity of this issue, just like the complexity of dealing with senior investors,” he added.
Cook didn’t offer any statistics of aging advisors or those suspected to have diminished capacity. Two years ago, the CFP Board said CFPs above the age of 70 outnumber those under the age of 30, and more than 20% of CFPs were retiring at the time.
Cook said “obviously, HR [of member firms] needs to be closely involved in this area.”
The Finra chief shared some of the measures already being taken by member firms that may have concerns about diminished capacity among their aging advisors.
“One thing we’ve seen firms do is to potentially engage in heightened supervision with respect to advisors where they may have some concerns. In addition, some firms have more frequent touch points with advisors’ customers when they think there might be some concerns,” Cook said.
“We’ve also seen some firms, obviously depending on firm size, trying to think about long-term succession issues and maybe partnering more junior advisors with more senior advisors so that there can be some greater confidence that the customer is going to have a seamless experience over time,” he added.
Still, Cook said “there’s no right answer to this issue.”
Cook added: “This is one of those areas where we’re still learning from firms and a lot of firms have put a lot of thought into it, but it’s something that we all have to be focused on.”