Seniors Should Take Care in Seeking Specialized Investment Help

As the nation ages, the investments industry is clamoring for the senior market. But older adults face an alphabet soup in seeking financial advice.

Most would recognize Jane Johnson, M.D., as a doctor and Joe Jones, Esq., as a lawyer. Decoding the letters after investment professionals' names, on the other hand, can be overwhelming.


	Patricia D. Struck, Wisconsin securities administrator and president of the North American Securities Administrators Association, pictured here at her state base in Madison, cautions older adults to research any professional offering investment help. (Photo by Brent Nicastro)

NASD, formerly known as the National Association of Securities Dealers, charts 59 combinations. Among them: certified financial gerontologist (CFG), certified senior advisor (CSA), certified senior consultant (CSC) and certified senior specialist (CSS).

And while countless thousands claim expertise in selling to seniors, securities regulators caution consumers to investigate before entrusting anyone with their money.

"You never want to make a decision solely based on the fact that they have this credential," said Patricia D. Struck, Wisconsin securities administrator and president of the North American Securities Administrators Association, based in Washington. "You should always call the securities regulator in your area."

Securities, which include stocks and bonds, carry varying degrees of risk. Investment professionals -- generally brokers and investment advisers -- must be licensed or registered with a state securities agency or the federal Securities and Exchange Commission.

NASD, based in Washington, recognizes there may be confusion. Its Web site, without endorsing any designation, provides details about each, such as the issuing organization, educational requirements and whether disciplinary actions are made public. (For more, go to http://apps.nasd.com/investor(percent)5Finformation/resources/designations)

John Gannon, NASD vice president for investor education, said consumers must weigh these factors in gauging the credibility of any title, and get to know the person who carries it.

Regulators say the titles themselves don't signal a swindler; many investment professionals have earned the credentials and operate honestly. But the dishonest seem to follow a pattern, enforcement filings suggest.

Verbally or through printed promotional material, the salesperson may list credentials and professional memberships that suggest expertise with senior investments.

To find clients, he may send mailings to a home, follow up with a phone call, then visit in person. He may run a senior investment seminar, perhaps promising a free meal.

He may not be licensed to handle securities, yet may pressure the potential client to liquidate an existing portfolio or retirement account, promising higher returns in an annuity, a life insurance product that issues periodic payments and may be tied to securities. But he conceals the commission, fees or restrictions.

In one example, detailed in an enforcement case filed in November, Massachusetts investigators found that a 71-year-old woman was sold two annuities, locking up more than $700,000 that she could not touch for 15 years without paying a penalty as high as $175,000.

Regulators say scammers are taking advantage of a growing market.

Not only are baby boomers increasing the ranks of seniors, Americans are living longer, said George Gaberlavage, assistant director of the Public Policy Institute of AARP, the Washington-based advocacy group. That requires them to have more financial resources.

According to a 1989 federal survey, 10 percent of households in which the head was age 65 to 74 held mutual funds, which can include a variety of securities. By 2001, that portion rose to 20 percent.

Some regulators regard the senior expertise designations as little more than marketing tools. "These titles are self-congratulatory and meaningless," said Massachusetts Secretary of the Commonwealth William F. Galvin.

But organizations that issue the certifications defend their value.

"It is a supplement, not a substitute" for proper training and licensing, said Dan Danbom, spokesman for the Society of Certified Senior Advisors in Denver, which issues the certified senior advisor designation to a variety of professionals, including insurance agents, clergy and doctors. "We teach people to communicate better."

If a financial planner wants to do business in Mexico, speaking Spanish would help, Danbom said. Likewise, a professional who wishes to serve the senior community is more effective knowing, for example, that an older adult might have trouble reading small print or that, in many cases, seniors want to remain independent.

Gordon Williamson, executive director of the Institute of Business & Finance in La Jolla, Calif., said the education and testing involved in earning the institute's certified senior consultant designation address issues of specific concern to seniors, including life insurance, Medicare and long-term care insurance.

But Williamson, too, offers a warning: "The fact that anyone has any designation does not make them beyond reproach."

It's impossible to know how many use the titles to deceive. Regulators are just beginning to track the scope of such fraud.

Jim Nelson, Mississippi's securities administrator, said victims are often embarrassed, and those who seek help from regulators often don't want to file complaints. He said many more likely keep the damage secret.

"That's why prosecution of (scammers) is so difficult," he said.

Be aware of fraudulent tactics, Nelson advised. Anyone who tells a consumer to sign a document without the chance to review it or who suggests not telling anyone else about a "special deal" is suspect.

And reject sales pitches built on fear.

"These guys play on (seniors') feelings: `You don't want to send your grandchild to college?"' said Michael J. Byrne, chief counsel of the Pennsylvania Securities Commission. "With a song and a dance ... what they are left with is their Social Security check."

Consumers unsure about an investment product or professional have several options:

-- The securities administrators association features a senior resource area at www.nasaa.org, including contact information for state regulators and a checklist of details to obtain from investment professionals, such as license types and numbers. To find a state regulator by phone, call (202) 737-0900.

-- NASD has advice at www.nasd.com and a broker check line at (800) 289-9999.

-- The SEC assists consumers at (800) 732-0330, www.sec.gov or help@sec.gov.

Jan. 13, 2006

"According to a 1989 federal survey, 10 percent of households in which the head was age 65 to 74 held mutual funds, which can include a variety of securities. By 2001, that portion rose to 20 percent."- They must have excluded annuities.

They must have excluded annuities.

Definitely. And insurance policies. Or the combination of the two!

As The Who said 30 years ago:

Now a days it's the old man who's got all the money
And the young man...
Ain't got nothing in the world these days!

According to a 1989 federal survey, 10 percent of households in which the head was age 65 to 74 held mutual funds, which can include a variety of securities. By 2001, that portion rose to 20 percent.

I wish it were higher. Too many people I meet are woefully unprepared for retirement.

I wish it were higher. Too many people I meet are woefully unprepared for retirement.

I have spent a reasonable portion of the last 10 years studying and preparing for retirement.

Even with only a year or so of spare time preparation, you are your own best financial advisor. Only you can be trusted to keep your own best interest at heart.

Anyone who is literate enough to read/post on FR is capable of handling their own money and should consider a financial advisor only as a stopgap measure.

The problem is that the world has too many of the types of advisors mentioned in Question 2 of this Scott Burns column: Scott Burns Jan 12, 2006

There is not a good way for the average person to separate the wheat from the chaff.

I agree. That's been one of my frustrations, is that I'm immediately lumped in with the minority of unscrupulous, self-serving crooks.

That's also one of the reasons I decided to become an advisor. I've seen, in my decade in the financial industry, too many unscrupulous or incompetent advisors. I'm here to help those crooks' clients get out of the crooks' clutches.

Unfortunately, the only way to find a good advisor is the same way you find a good, honest, competent doctor or mechanic: you ask around, you check references, you try to get to know them, and ultimately, you have to decide for yourself if you think the person is trustworthy.

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