The following example is unfortunately not an isolated incident of an abusive sales practice. If accountants were consulted more often by their clients, maybe the following would never happen. He did not mention how easy it had been to get that title. He had paid $1,095 for a correspondence course, then took a multiple-choice exam with questions like, “Marketing can best be described as:” (The answer: “The process or technique of promoting the sale or distribution of a product or service.”) Like more than 18,700 other applicants since 1997, he passed. Insurance companies, eager for sales representatives, embraced Mr. Sell Bigpolicy, as they have thousands of other newly credentialed advisors. The following year, multiple insurers paid him commissions totaling $720,000 as his business with retirees soared. But many of those sales came from steering older Americans into unwise investments, regulators contend in a lawsuit. Mr. Sell Bigpolicy denies all wrongdoing, but one of his clients – a 73-year-old widow caring for a son with Down syndrome – said he tricked her into buying complicated insurance contracts that left her unable to pay dental and home repair bills. “His office was filled with things saying he was certified to help seniors,” said that client. “The only one he really helped was himself.” Taking care of the finances of older Americans is a huge and potentially lucrative field, and the market is growing. Attracted by this market, many financial planners have shifted their focus to it – and bring widely varying attitudes and professional training to the consultation table. Training and certification in financial gerontology is now being offered by at least four groups. The Securities and Exchange Commission does not regulate these groups – or any other groups that provide financial planning certification, for that matter. “The S.E.C. does not endorse any professional designation,” said Susan Wyderko, director of the office of investor education of the S.E.C. The absence of government supervision is a problem, said Stephen Brobeck, executive director of the Consumer Federation of America. “There’s an opportunity for fraud,” he said, adding that older people need to be very careful about whom they trust for advice. Regardless of any planner’s credentials, the S.E.C. and consumer organizations say the best approach is “buyers beware.” Investors can learn how to check the background of a financial planner, including any disciplinary actions, at the S.E.C.’s website, www.sec.gov. Such background checks, along with a discussion about an advisor’s approach to investing, are well advised before signing up with a planner. “We see too many investors who might have avoided trouble,” Ms. Wyderko of the S.E.C. said, “had they asked basic questions right from the start.” Mr. Sell Bigpolicy is one of tens of thousands of financial advisers working hand-in-hand with insurance companies to market themselves to older Americans using impressive sounding credentials. Many of these titles can be earned in just a few days from businesses concerned only with the bottom line and sound similar to established credentials that require years of study, difficult tests and extensive background checks. Many graduates of these short programs say they only want to help older Americans. But they are frequently dispensing financial counsel that they are not qualified to offer, advocates for the elderly say. And thousands of them are paid by some of the country’s largest insurance companies to sell elderly clients complicated investments that some economists say most retirees should never own. More than two dozen such programs now exist, and have enrolled more than 39,000 people over the last decade. But some of the existing programs, which are often linked to insurance companies, have taught agents to use abusive sales techniques, regulators say. Some insurers have been listed as sponsors at seminars with names like the Million Dollar Academy, where thousands of sales representatives were advised to scare retirees by saying, “I am all that stands between you and potential catastrophic loss.” Other seminars instructed agents to “drive a wedge” between retirees and their established advisors. “The insurers are happy to turn a blind eye to what salesmen are doing, as long as they make a sale,” said Minnesota’s attorney general, Lori Swanson, who is suing several companies, contending that their products are at best inappropriate, and possibly worse. Insurance companies say they investigate the backgrounds of all agents, screen all sales to consumers to make sure they are appropriate, and have terminated representatives using improper sales methods. Those companies said they were not aware of abusive methods taught at any seminar they endorsed. Some insurance companies say that they do not tolerate misrepresentation. Another insurance company, in a statement, said “Any evidence of sales agent misconduct, without exception, results in immediate termination.” Nonetheless, complaints over sales of insurance products have soared. In particular, grievances have stemmed from annuity sales. Obviously, occasionally a buyer of a product buys it without a full understanding of the product. If the product does not perform as expected, possibly because the stock market went down, the buyer may have a selective memory failure. The buyer can then complain to the insurance company, among other places. If the salesperson sold in good faith, and the product was appropriate, sometimes the buyer may still have recourse. Is this fair? Read more
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