Recently, many of our clients have received calls, emails and/or mailings about details of their accounts. The reason is due to a new rule all brokers and registered representatives must adhere to effective July 9, 2012. The Financial Industry Regulation Authority, or FINRA, issued new suitability rules. The new suitability standard is the level of care advisors are required to give their clients. Investments must be suitable for clients based on several categories. With the new rule, these categories have expanded and have caused a need for updated client information.
Overall, the rule requires brokers to perform reasonable diligence on products, understand those investments and have a reasonable basis to believe that a security or investment strategy is suitable. It also adds age, investment experience, time horizon, liquidity needs and risk tolerance to the list of factors that affect a suitability determination.
The need for this additional information will not change the current investments in your account. The information will not change the way in which your account is serviced. The new rule does require that we update this additional information within your account record for future transactions. In the end, this rule change is good for both the client and the advisor.
This rule is not the first time FINRA has made changes to regulations, and it certainly won’t be the last. The one thing that will not change is the level of service you receive through your Founders Financial Consultant.
Securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC - Founders Federal Credit Union, Founders Financial Group, LLC and Founders Insurance Services are not affiliated with Financial Network Investment Corporation. Financial Network Registered Sales Branches are located at 607 N. Main Street, Lancaster, SC 29720; 1290 Old Springdale Road, Rock Hill, SC 29730; 100 Springcrest Drive, Fort Mill, SC 29715; 1307 Boiling Springs Road, Spartanburg, SC 29303.
Not NCUA Insured - No Credit Union Guarantee - May Lose Value - Not Deposits - Not Insured by any Federal Government Agency.
This article was written by Keith Benton, CFP with Founders Investment Services Team.