July 10, 2007
Conflicts of Interest and the "Certified Senior Advisor"
Posted by Christine Hurt

The NYT has had a series of articles lately on sharp business practices that prey on seniors.  Last Sunday's Times featured an article entitled For Elderly Investors, Instant Experts Abound.  The gist of the story is that an increasing number of individuals are marketing themselves as "certified senior advisor," "certified elder planning specialist," "certified retirement financial advisor," or similar title.  Although these titles sound like the more weighty "certified financial planner," these titles can be earned by correspondence courses in very short periods of time or by attending multi-day seminars and may not require a bachelor's degree.  These individuals go on to become independent agents working for insurance companies.  Stories abound of these agents selling inappropriate, expensive insurance and annuity products to seniors.  (One example given is the agent who sold a 72 year-old widow supporting a son with Downs Syndrome a deferred annuity, payable beginning in ten years, in return for her entire $75,000 savings.)

Although the article tends to link the agents' lack of financial training with the selling of these unsuitable savings vehicles, additional training would not have stopped these fiascos.  The agents weren't investing clients money in products that made no financial sense.  They were selling clients products that made huge financial sense to the agent, but no financial sense to the client.  These were the products that their employers liked them to sell, the products that carried the largest commissions.  I suppose one could say that theoretically, if the agent had been more financially astute, then the agent would have realized what bad financial sense thse products were for his clients.  (This assumes that he did not know already -- a big assumption)  However, as someone who has endured the "whole life insurance" pitch from her certified financial planner for years, I'm not sure.  Any time that a financial planner has an employer who sells investment products, there will be a conflict of interest between the advisor that wants to sell a complex product with a large commission and the client who would just like a simple index fund, thank you.

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