By Greg Wright,
MBA, CFE, CFP®, CLU, ChFC
Certified Fraud Examiner
Certified Financial Planner™
We hear it almost daily on the radio and read the ad copy that explains: retirement expert helped my parents, he can help seniors like you, specializes in retirement planning.
Senior citizens are the focus of stockbrokers and insurance agents because they own well over half of the financial assets in America. Those assets are becoming liquid as the baby boomer generation retires and move huge amounts of money from corporate 401K plans into personal IRAs and annuities.
The financial services industry has been gearing up to help seniors move that money by designing products and training its salesforce. They have been very creative in convincing seniors about its representatives’ expertise by incorporating professional appearing designations on their salesmen’s business cards, stationary, and presentations. Some of these professional designations are of small value and others are simply bogus.
Unfortunately, some seniors get lulled into believing the senior alphabet soup next to their financial advisor’s name or his marketing materials really means that the person has special skills when it comes to advising seniors.
State securities regulators have been very worried about this, according to the past president of the North American Securities Administrators Association. "We are taking a growing number of administrative actions against people using designations as part and parcel of fraudulent securities activities, especially with older people."
Professional certifications arose decades ago as a way for firms in various industries to identify qualified practitioners. In the financial realm, many well-established credentials, including the certified public accountant, chartered financial analyst and certified financial planner designations, require long study, demand continuing education and enforce strict codes of ethics. In order to become a CPA, for example, one must pass a 14-hour CPA exam.
Many newer credentials, however, require comparatively little effort on the part of the students and little or no continuing education. Some are no better than a certificate you might find as a prize in a cereal box.
A few weeks ago, Massachusetts regulators fined LPL Financial charging that they misrepresented the qualifications of its representatives when working with older investors – seniors. Apparently an LPL reprehensive referred to himself as a “Retirement Income Planning Specialist.” The regulators said that LPL had even approved an offending title on a broker’s business card more than once.
What is a senior designation?
There are over 150 financial designations currently in use. Two specifically identified as offensive by others and not allowed to be used in Indiana in conjunction with the senior market: Certified Senior Consultant and Chartered Senior Financial Planner.
If you want to check out these two or the alphabet soup next to your financial advisor’s name, a good place to start is the Financial Industry Regulatory Authority website. There you can find out the experience requirements, testing, continuing education, how to process complaints and the accreditation organization (if any),
To address the senior designation issue, the North American Securities Administrators Association, a group of state securities regulators, and the National Association of Insurance Commissioners, a group of state insurance commissioners, both devised a similar model law for states to follow in regulating professional designations that relate to older investors – seniors. It is called the Model Rule.
Most states, including Indiana, have adopted the regulations.
These regulations prohibit the uses of senior-specific certifications and professional designations except for seven that have been approved by two certifying organizations and the U.S. government. The rules deem it unfair and deceptive for an insurance agent or stockbroker to use a professional designation that implies in such a way as to mislead the purchaser that the person has special training in advising or servicing seniors.
This rule does not apply to certifications or designations that have been accredited by the American National Standards Institute, or the national Commission for Certifying Agencies, or an organization on the list of Accrediting Agencies Recognized for Title IV purposes.
Seven professional designations that meet these criteria are:
1. Certified Financial Planner –CFP
2. Certified Investment Management Analyst – CIMA
3. Accredited Retirement plan consultant –ARPC
4. Certified Medicaid planner – CMP
5. Certified Retirement counselor – CRC
6. Certified retirement Financial Advisor – CRFA
7. Certified Senior Advisor – CSA
However, as much as these regulations appear to be a good idea, according to Indiana regulators, no one has been found to be in violation of these regulations. Maybe no one has filed a complaint. Perhaps the regulators don’t listen to the radio.