Firms aiming to attract retirees to fixed-income investments should be building compliance and supervisory programs to safeguard themselves from future enforcement actions, said Brandon Becker, partner with WilmerHale in Washington, D.C. "We can see that there is going to be an increased level of retirement savings turning to the fixed income market...firms should be sensitive to compliance responsibilities throughout this process," Becker said. Becker, the former director of market regulation for the Securities and Exchange Commission, said marketing campaigns are starting. "Then the question will be what happens when people lose money and they start to complain," he said.

At a LegalWorks-sponsored compliance forum in New York in January, Barry Goldsmith, the departing NASD executive v.p. of enforcement, emphasized that regulators are already concerned with the needs of the retiring investors. "The financial services industry should begin offering products that meet the investment needs of retirees," Goldsmith said. "The industry needs to build relationships with investors that go beyond traditional models. A lot of products are sold to accumulate wealth...as people approach retirement age, needs change." Goldsmith said equity indexed annuities, with high broker commissions and penalties for pulling out of the stock early, are not suitable investments for retirees, who may need quick access to their money. He said it is an unsuitable recommendation to sell EIAs to older investors (CR, 1/23).