Regulators Urge Investors to Carefully Check Credentials of ‘Senior Specialists’

The Michigan Office of Financial and Insurance Services (OFIS) today urged seniors to carefully check the credentials of individuals holding themselves out as “senior specialists.”

“Individuals may call themselves a ‘senior specialist’ to create a false level of comfort among seniors by implying a certain level of training on issues important to the elderly. But the training they receive is often nothing more than marketing and selling techniques targeting the elderly,” said Linda A. Watters, OFIS Commissioner.

“These sales people and the alphabet soup of letters after their names can be confusing, and in some cases, may even be deceptive to seniors,” Watters said.

The North American Securities Administrators Association (NASAA) today announced that it has observed a significant increase in designations claiming to provide the holder with expertise in providing services to investors 55 years and older. Securities regulators have opened 26 cases in the past year involving “senior specialists” in the eastern half of the United States alone. Most of the cases involve securities recommendations by individuals who are not properly licensed by state securities regulators.

Michigan OFIS has also received complaints about seniors being taken advantage of by scammers and is taking actions available under the law to protect these seniors.

Watters said bogus senior specialists commonly target senior investors through seminars where the specialist reviews seniors’ assets, including securities portfolios and typically recommends liquidating securities positions and using the proceeds to purchase indexed or variable annuities products or other investments the specialist offers.

In many jurisdictions, including Michigan, these recommendations may be viewed as providing investment advice for compensation. In Michigan, Investment Advisors are registered by OFIS, as are Insurance Counselors. Michigan also allows certified financial planners who can make recommendations about taxes and wills and other financial documents, but cannot make recommendations or give advice about investments or insurance without being licensed or registered by OFIS.

“The senior specialist may be offering investment advice as an unregistered investment adviser and, therefore, be subject to enforcement action by OFIS,” Watters said.

Although there are legitimate organizations whose members must complete rigorous programs of study, pass extensive examinations, and have practical experience in order to receive their designations (i.e. Certified Public Accountants (CPA’s), Certified Financial Planners (CFP’s), registered security agents), a number of entities formed in the last few years have created designations with much less stringent requirements. Without reviewing the course material for each of these designations, it is difficult to verify the claims made by the promoters.

Watters continued, “Before doing business with any investment professional, all investors, especially senior investors, should contact OFIS by email or toll-free at 1-877-999-6442 to determine whether the individual is properly licensed and if there have been any complaints or disciplinary problems involving the individual or his or her firm.”

The OFIS website at www.michigan.gov/ofis and the Senior Investor Resource Center on the NASAA website at www.nasaa.org have additional investor education and protection tips for seniors.

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