Included in the bill introduced earlier this week by Senator Chris Dodd is a provision to create a new grant program to assist states in their efforts to protect seniors from misleading financial advisor designations.
Senators Herb Kohl (D-WI), Bob Casey (D-PA), Claire McCaskill (D-MO), and Al Franken (D-MN), all members of the the Senate Special Committee on Aging, hailed the provision to protect older Americans from fraud at the hands of unscrupulous financial advisors.
“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. 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,” said Senator Kohl, chairman of the Special Committee on Aging.
“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 McCaskill, who has taken an aggressive stance on her concern over abuses in the reverse mortgage business said, “Seniors have worked too hard for too long to become victim to scams that can leave their finances in ruin. I was glad to see that the financial reform legislation introduced today included language to help protect seniors.”
“Fraud costs our seniors over $2 billion a year. This bill will go a long way toward ending that now. 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,” said Senator Franken.
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.