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U.S. Senate
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Senator Kohl, D -
Wisconsin has stated he will develop new legislation to provide uniform
standards for accreditations of senior financial advisors.
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Senior Summit
of the Aging committee presented in September 2007 with a distinguished
panel.
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SEC
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In September
hosted the 2nd annual Senior Summit with FINRA and AARP. The SEC is
also mentioning the AARP “Lunch and Learn” programs and has during
2007 participated in hosting several “Senior Educational Events”
trying to help educate seniors about investment issues they face. An
advisory on what
investors
need to know about Senior Advisor designations has also been issued.
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FINRA
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Has issued a new
webcast which deals with considerations in dealing with seniors
(including both baby boomers and seniors).
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FINRA has long had
a listing of professional designations on its website. The listing;
however, does not mean that FINRA has approved the designations or
that they are appropriate for use. To be included on FINRA’s list, a
number of criteria, such as continuing education, must have been met.
In
addition, certain web casts alert representatives that designations
may encompass a wide variation of requirements for use and may be
misleading. The web casts discuss the use of ghost written books which
convey the impressions of expertise in certain areas. Producers are
reminded that it is not only the designation that are considered
misleading representations, but the use of materials such as ghost
written books may lead to the impression, or cause a producer to rise
to the level of an investment adviser. Actions and words both speak
here.
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Alabama
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Has taken legal
action against producers for acting as unregistered investment
advisers.
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California
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On 5
October 2007 the Department of Insurance announced the launching of a
senior issues task force.
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Although
not specifically mentioning designations, a reference to developing
strategies to protect seniors from predatory insurance schemes is
likely to encompass
such a topic. A 2005 notice to insurance agents referenced that
seniors often buy annuities because agents misrepresent themselves as
advisers.
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Iowa
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On 7
September 2007 Bulletin 07-05 was issued by the Iowa Insurance
Commissioner concerning Improper Use of Certain Designations/Titles
Targeting Senior Purchasers.
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This
memo issued guidelines concerning the proper use of designations by
producers in the sales and marketing of insurance products.
The memo listed 10 designations which the IID deemed relevant.
Noting that the list was not exhaustive and did not constitute
an endorsement of the designations, the IID will review designations
and titles in the future to determine whether or not use of such would
be a misrepresentation. Items
to be considered were – amount of time invested to obtain the title,
entity issuing designation and content of the course.
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Kentucky
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For
a number of years, Kentucky has had a policy in place which prohibits
the use of names, titles or degrees which imply or purport to convey
that such person possesses a greater skill, knowledge, experience or
qualification than is actually a fact.
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Maine
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2007-2008
proposed legislation initiative by the Department of Securities
includes 32 MRSA Section 16605
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This
section would clarify that it is dishonest or unethical for a Broker
Dealer, agent, or investment adviser to use a title or designation
implying special expertise or training in providing services except as
allowed by rule. It is expected to be effective prior to October 2008.
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Massachusetts
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Several
administrative actions have been taken against agents by the
Securities
Division which focus on the use of misleading credentials.
Additionally, in May, 2007 the Securities Division issued
orders which recognized the accreditation organizations The American
National Standards Institute (“ANSI”) and the National Commission
for Certifying Agencies. In June, a new regulation was issued as 950
CMR 12.204(2)(i) – Dishonest and unethical practices in the
securities business.
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In
a lengthy Memo issued by the Securities Division, Massachusetts
discusses some of their reasons behind their new regulations. In part,
the Division cites that many of these designations allow an agent to
“masquerade as an unbiased advisor
to seniors”. Hence, the designation has been seen as a means of
potentially catapulting an insurance agent’s duty from that of
suitability to fiduciary.
The
memo also notes that such titles are confusing to Seniors and that it
is “doubtful that the use of disclaimers would mitigate consumer
confusion.”
The
language of the final regulation sets forth factors to be considered
in determining whether a combination of words of a purported
credential indicates or implies
a broker-dealer agent or investment adviser may have special
certification or training. Words such as “senior” or “elder”
coupled with “certified” , “adviser”, or “specialist,” for
example may cause problems for an agent under the regulation.
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Nebraska
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The
Department of Securities issued Interpretative Opinion 26 concerning
use of certifications and designations in advertising by investment
adviser representatives and broker-dealer agents.
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At
the end of 2006 the Department of Insurance
issued a Special Notice relating to
the use of various designations in sales to senior citizens.
The special notice among other things requires that seminar materials
and presentations must be approved
by a compliance department of a BD or RIA prior to the event.
Additionally designations which are listed in 48 NAC 9.004.02 are
acceptable. Quarterly the Department will review the listing of
acceptable and unacceptable designations. Use of unapproved
designations on business cards, letterhead or advertising is a
violation of law.
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New
York
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On
12 September 2007 the department of insurance announced the
establishment of an elder protection unit which will in part develop,
coordinate, and implement initiatives to protect NY’s senior
citizens in the purchase, servicing, and claim processing of insurance
products.
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Although
the use of designations is not specifically addressed in this
announcement, the unit will investigate deceptive and illegal sales
practices against senior citizens which could include the use of
misleading designations.
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Oregon
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Like
Idaho and several other states, Oregon has begun a series of free
workshops that will help seniors and their families to detect
investment fraud, which would include misleading sales and advertising
tactics.
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The
seminar is part of an AARP initiative.
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Tennessee
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Tennessee
in 2005 issued a notice concerning the use of Senior Specialist
credentials.
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Texas
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The
AG’s office currently has a Consumer Protection and Public Health
Division which works to identify and aggressively prosecute those who
cheat or deceive the elderly. One of the focuses of the Division is
“advertising and sale of insurance and retirement-oriented
investments, financial planning services, estate planning and legal
services directed at senior Texans.”
While not specifically addressing designations, it is assumed
such will be part of the Division’s review.
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Utah
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Since
1998 Utah has had R590 as an enforceable
rule. Included in R590-79-6 which states in part that terms such as
“financial planner, investment advisor, financial
consultant or financial counseling” shall not be used unless
properly licensed
if required or in such a way as to imply that the insurance agent is
generally engaged in an advisory business in which compensation is
unrelated to sales unless such is actually the case and represented by
way of required disclosure.
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Washington
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On
9 July 2007 a Notice of Pre-proposal Statement of Inquiry was filed by
the Department
of Financial Institutions, Securities
Division, which notes the growth in the use of professional
designations which state or imply that a person has special expertise,
certification, or training in financial planning. At the same time,
another statement of inquiry was filed which notes that persons who
are not registered as investment advisers may lead a reasonable person
to believe that financial planning service or advice is being offered.
The department feels that rule-making is necessary to clarify that use
of some designation and other conduct may necessitate registration as
an investment adviser.
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Wisconsin
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On 1
August 2007 the Insurance Commissioner announced the creation of a
special committee to analyze the annuity sales marketplace in
Wisconsin.
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A
report which is anticipated to address various areas of marketing
practices will hopefully be issued within 18 months.
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