8 March 2007 14:48 Dow Jones News Service
By Jaime Levy Pessin
A Dow Jones Newswires Column
NEW YORK (Dow Jones)–A “Certified Senior Advisor” doesn’t necessarily have any special expertise in financial planning for senior citizens.
Starting next year, financial advisors and other professionals with the CSA designation will need to disclose this inconvenient fact in writing to clients before completing a transaction. And the Denver-based Society for Certified Senior Advisors, which provides the CSA certification, said it started including the disclosure on its marketing materials in January.
“We’re on (the regulators’) side,” said Dan Danbom, a spokesman for the CSA society. “Our objective is the same: That’s to benefit seniors…. When you do work with seniors, there is a higher standard.”
The disclosure reads: “Certified Senior Advisors (CSA) have supplemented their individual professional licenses, credentials and education with knowledge about aging and working with seniors. Know what those licenses, credentials and education signify. The CSA designation alone does not imply expertise in financial, health or social matters. Details: www.csa.us .”
Sally Hurme, senior program manager for financial security at AARP, said the more information investors can access, the better.
“I think that it’s very important that all consumers understand what the alphabet soup of initials after people’s names signifies,” she said, adding that investors should know what training the designation requires, what ethical standards it uses and how those standards are enforced. “It’s very important that whoever is providing any kind of designation makes it very easy for the consumer to understand what that means.”
In 2006, federal and state securities regulators launched an initiative to protect retired and elderly people from unscrupulous financial advisors. Regulators say they have seen a growing number of complaints by people defrauded by financial advisors who claim to have special expertise.
Earlier this week, Massachusetts securities regulators brought complaints against four people and a brokerage house, alleging that they schemed to take advantage of elderly people, and made questionable claims of expertise in dealing with seniors. One of the men had been a CSA during the time of the alleged misconduct; Danbom said the man doesn’t hold the designation anymore and is no longer eligible for it.
The Massachusetts regulators also proposed new rules that would require organizations like the Society of Certified Senior Advisors to apply for recognition with the state; it would be considered a dishonest or unethical practice for someone to use an unrecognized designation.
Part of the confusion among seniors, regulators say, is the sheer number of designations available to registered representatives. The FINRA’s Web site lists more than 50 designations available financial advisors. While people who earn a Certified Financial Planner designation, for instance, often spend more than a year and a half taking courses, other designations require much less work.
“They’re solely used to give a sense of comfort (to investors) and a marketing device” to financial advisors, said Stuart Meissner, a lawyer who used to work in the investor protection unit of the New York Attorney General’s office. “When that is done with no other explanation from the broker… that is misleading.”
Meissner added that he thinks the disclosure will be “very helpful,” and that other similar organizations should do the same.
“Such designations often are abused, and this would go a long way in preventing such abuse,” he said.
The Society of Certified Senior Advisors has about 13,000 members. About one-third of its members come from the insurance industry, according to a spokesman. Another 12% are securities and commodities brokers.
Since it started in 1997, the organization has offered a three-day course and half-day exam to professionals seeking the designations; members include doctors, lawyers and real estate brokers, in addition to those in the financial-services industry.
It costs $1,395 to attend the organization’s course, and less for those who choose a self-study option. The group’s Web site refers to the marketing advantages of having the designation, including the ability to use the CSA logo on advertising material and a listing on the group’s Web site.
(Jaime Levy Pessin covers compliance and regulatory issues affecting financial advisors.)
-By Jaime Levy Pessin, Dow Jones Newswires; 201-938-4546; jpessin@dowjones.com [ 03-08-07 1448ET ]