Senate Aging Committee Supports Dodd Bill to Protect Seniors From Misleading Designations

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.

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  • It seems the goal of lower origination fees/costs vs. more rigorous education/credential requirements are potentially in conflict. Which would win out if push came to shove?

    Said another way, how many seniors that need reverse mortgages also have the financial resources to pay for CPA/CFP/CFA level financial advice? Is this a general education/credential requirement or a product specific one that should be pursued? The former would seem to increase rather than decrease costs and the latter would likely be confusing for consumers to navigate if applied broadly to the financial services industry.

    Interesting times, indeed.

    • John,

      We have many fields where such is the case. In medicine there are doctors who perform surgery and medical procedures while there are also RN practitioners advising on more routine matters. In law there are attorneys who represent clients and provide legal services while there are paralegals who help people fill out forms and work through less complicated legal problems. In accounting there are bookkeepers who do an adequate job of recordkeeping for many smaller businesses with CPAs for tasks requiring a license or requiring more technical training.

      I have met holders of one credential I hold who brag about their accomplishment as if they held a Ph.D. in Gerontology or a M.S. in Financial Services; yet they spent less than 4 days getting this “super” credential. For many this is the only credential they hold. What qualifies them to be a “senior advisor”?

      I am but scratching the surface. It is time to eliminate the use of credential mill awards. I doubt if many seniors seek out the services of a CPA just to get a reverse mortgage anyway? When a credential requires little achievement or attainment over difficult subject matter, then why not eliminate the use of such credentials? Even though I greatly respect holders of the CFP desigination, there are no statutory rules governing them; yet I would strongly support their inclusion.

      The named rules seem to be working well in the financial services industry. Why not institute them in the mortgage and more specifically the reverse mortgage industry? Why confuse seniors anymore?

  • The explosion of credentials has cheapened almost all credentials. It is time that the government took this type of action. As expected it took Democrats in the Senate to propose this clamp down on the proliferation of less than meaningful designations. It is ridiculous when most financial industry related credentials have less educational requirements than those required of a union journeyman carpenter.

    It is really disturbing when some credentials do not even require a high school diploma or its equivalent. Why would a finance industry credential not require some college level basic courses in finance, income tax, and business law? If credential is real estate related why would it not require at least one college level basic course each in real estate law, real estate finance, and real estate law?

    The CFP is a respected credential because not only is it a difficult closed book exam but it has a fairly difficult college level course regimen. If a credential does not have that level of discipline, then what is the point of awarding it?

    I “earned” one credential which I hold in contempt. It says the holder is a senior advisor. Yet it took less than 4 business days to earn it. A significant part of the course emphasized what appeals to seniors and how to market to them. While I found these few hours of education valuable, it certainly qualified no one to be declared a senior advisor.

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