Democrats on Senate Aging Committee Back New
Bill to Protect Senior Citizens from Fraud
Financial regulation bill includes language to
protect against unscrupulous financial advisors
March 16, 2010 Four Democrats on the Senates
Special Committee on Aging came together yesterday to support a
provision included in the Restoring American Financial Stability Act
that they say will protect older Americans from fraud at the hands of
unscrupulous financial advisors. Speaking out were senators Herb Kohl
(WI), Bob Casey (PA), Claire McCaskill (MO), and Al Franken (MN).
The provision, included in the bill introduced by
Senator Chris Dodd (D-CT), is based on S. 1661, the Senior Investor
Protection Act, which calls for the creation of a new grant program to
assist states in their efforts to protect seniors from misleading
financial advisor designations.
The U.S. House of Representatives included similar
provisions in H.R. 4173, the Wall Street Reform and Consumer Protection
Act of 2009.
"Many of the professions in which consumers place
their greatest trust, such as lawyers, doctors, and CPAs, cannot offer
their professional services without certain standardized credentials,"
said Senator Kohl, chairman of the Special Committee on Aging.
Seniors should not have to worry that the title
after their financial advisor's name is scarcely more than a marketing
ploy, and that it was not earned through sufficiently rigorous financial
education or training.
"Currently, there is no nationwide standard
governing the fiduciary responsibilities of financial planners. I will
continue to work with Chairman Dodd in the coming weeks to enhance
consumer protection and increase the accountability and oversight of
this profession as part of regulatory reform."
Senator Casey added, "The economy has caused enough
financial insecurity without having to worry about whether the person
investing your savings is qualified. The grant program included in
Chairman Dodd's bill is a positive step toward protecting senior
investors.
"Seniors have worked too hard for too long to
become victim to scams that can leave their finances in ruin," said
Senator McCaskill.
Sen. Franken pointed out that fraud costs senior
citizens over $2 billion a year. "This bill will go a long way toward
ending that now, he said.
It's time we protect seniors from misleading and
fraudulent marketing practices by making it harder for salespeople to
overstate their certification or professional expertise. It's time we
make defrauding seniors like this a crime."
Americans over the age of 65 control nearly $15
trillion in assets. In these tough economic times, seniors are
discovering that their life savings have lost so much value they may not
be able fund their retirement. Desperate for advice, they look toward
investment advisors for strategies, and are increasingly offered
complicated investment tools such as reverse mortgages and various
annuity products, regardless of whether they are appropriate for the
investor.
These assets are also at risk from traditional
fraud and Ponzi schemes.
In September 2007, the Special Committee on Aging
held a hearing to examine some of the questionable practices used by
so-called senior financial investment specialists in order to gain
access to the retirement savings of older Americans.
The Committee's investigation revealed that many of
these designations 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.
Specifically, the new grant program would provides
states with incentives to improve their own rules regulating the use of
designations by encouraging them to adopt the North American Securities
Administrators Association's (NASAA) and National Association of
Insurance Commissioners' (NAIC) new model rules on the use of senior
designations.
The grants are designed to give states the
flexibility to use funds for a wide variety of senior investor
protection efforts, including: hiring additional staff to investigate
and prosecute cases; funding new technology, equipment and training for
regulators, prosecutors, and law enforcement; and providing educational
materials to increase awareness and understanding of designations.
The bill has been endorsed by AARP, NASAA,
Financial Planning Association, Alliance for Retired Americans, Fund
Democracy, Consumer Federation of America, National Organization for
Competency Assurance, and The American College.
For a copy of the letter Chairman Kohl sent
Chairman Dodd on increasing transparency, accountability, and oversight
of financial planners,
click here.
Senate aging committee looking at senior financial
advisor titles