FINRA Wants Reps to Obtain Approval Before Acting as Beneficiary/Executor/Trustee
FINRA has proposed a new rule requiring registered representatives to obtain approval from their firms any time a firm customer designates the rep as a beneficiary, executor, or trustee or grants a power of attorney. Upon receiving written notice, the firm must implement review procedures to assess whether the designation or grant presents undue risk for the client. FINRA believes such a rule is necessary because of the inherent conflicts of interest coupled with evidence that reps have attempted to circumvent firm prohibitions by using a friendly colleague or naming a family member.
Regardless of where FINRA lands on this rule, we recommend that compli-pros prohibit such designations in the WSPs. FINRA correctly cites the conflicts of interest, especially with senior investors. If reps already circumvent firm rules, how can FINRA ensure that reps will notify their firms?