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Money, Insurance & Investments for Seniors
States Urged to Adopt New Standards for Those
Advising Senior Citizens on Investments
Senate aging committee chair will develop the new
standards
Sept. 10, 2007 – Following last week’s hearing by
the Senate’s Special Committee on Aging about the practices of financial
investment advisers using questionable credentials to gain access to the
retirement savings of senior citizens, Chairman Herb Kohl says he will
develop legislation to provide uniform standards for accreditation as
senior financial advisors. President of the Society of Certified Senior
Advisors told the hearing that the title is being misused.
State regulators, according to Kohl’s office, will
be encouraged to adopt these new standards.
“We know that an attorney must go to school for
three years and pass a state bar exam. A CPA must have a college
degree, an additional year of study and must pass a national exam.
Neither can offer their professional services without those
credentials,” said Kohl.
“Seniors should be able to trust the people who
invest their money. They should not be worried that the title after
their advisor’s name is scarcely more than a marketing ploy, and that it
was not earned through sufficiently rigorous financial education or
training.”
An earlier investigation conducted by the aging
committee revealed that many of the designations that have been cropping
up represent limited or no value with respect to advising seniors on
financial matters, and that often these designations are obtained simply
by attending a weekend seminar and passing an open-book, multiple-choice
test.
Many seniors targeted by salesmen using these
designations have lost their life savings because they were steered
toward investment instruments that were unsuitable for them, given their
retirement needs and life expectancy.
Edward Pittock, President of the Society of
Certified Senior Advisors, offered testimony in response to criticism
from state regulators that the Certified Senior Advisor designation is
often misused or misrepresented as signifying financial expertise, which
Pittock contends is not its purpose or intention. Several firms
recently have stopped using the CSA designation.
At Wednesday’s hearing, Chairman Christopher Cox of
the U.S. Securities and Exchange Commission (SEC) offered testimony
about the SEC’s relatively new initiatives targeting senior investment
fraud, setting the stage for their upcoming Senior Investment Summit
scheduled to take place September 10.
Minnesota’s Attorney General, Lori Swanson, spoke
on the second panel about her state’s efforts to eliminate senior
investment fraud, citing specific complaints filed by Minnesota against
companies that are inappropriately selling annuities to seniors.
William Galvin, Secretary of the Commonwealth of
Massachusetts, offered testimony about the broad range of violations his
office has encountered involving questionable senior financial advisor
designations. Massachusetts was the first state to conceive and impose
a regulatory structure upon this complex issue, with Washington and
Nebraska following.
Other witnesses on the second panel included
● Joseph Borg, Director of the Alabama Securities Commission and
President of the North American Securities Administrators Association (NASAA);
● Nicolas Nicolette, President of the Financial Planning Association (FPA);
and
● Sandy Praeger, Insurance Commissioner for the state of Kansas and
President-Elect of the National Association of Insurance Commissioners (NAIC).
Borg discussed NASAA’s state-by-state efforts to
combat the problems caused by the proliferation of inappropriate senior
financial advisor designations, and outlined NASAA’s policy that would
make it a violation of the law to use a designation to mislead
investors.
Nicolette testified about the value of legitimate
senior financial advisor designations and education, such as Certified
Financial Planner (CFP). Nicolette also described the impact that
inappropriate designations have on the credibility of the legitimate
industry, and what efforts FPA and other organizations are taking to
protect that credibility.
Praeger spoke to the Committee about the NAIC’s
Suitability Model with respect to the sale of all life insurance and
annuity products.
On the final panel, Gary Bhojwani, President and
CEO of Allianz of America Corporation, responded to the allegations of
sales and marketing abuses levied against his company both by state
regulators and the media.
As part of his testimony, Bhojwani announced
several new policies in an effort to safeguard seniors:
> the appointment of a Chief Suitability Officer,
> the development of an internal list of approved senior advisor
certifications, and
> the institution of a process through which every annuity purchaser
over the age of 75 receives a follow-up call from Allianz.
Links to Hearing Webcast and Testimonry
Advising Seniors About Their Money: Who Is
Qualified - and Who Is Not?
September 5, 2007
›
Click here to view webcast.
Statements of Committee Members
Senator Herb Kohl (D-WI),
Chairman
Senator Gordon H. Smith
(R-OR), Ranking Member
Witness Testimony
Christopher Cox, Chairman, US Securities and Exchange Commission,
Washington, DC
Lori Swanson, Attorney General, State of Minnesota, St. Paul, MN
William Galvin, Secretary of the Commonwealth, Boston, MA
Joseph Borg, President, North America Securities Administrators
Association, Washington, DC
Nicolas Nicolette, President, Financial Planning Association,
Washington, DC
Sandy Praeger, Insurance Commissioner, Topeka, KS, on behalf of the
National Association of Insurance Commissioners
Gary Bhojwani, President and CEO, Allianz Life Insurance of North
America, Minneapolis, MN
Edwin Pittock, President, Society of Certified Senior Advisors,
Denver, CO
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