May 4th 2012: The financial industry is well of aware of the fact that seniors and their savings are a boon to profit margins and increasingly, they are thinking of new ways to attract clientele in the older demographic.
In March, CARP commented on the Bank of Montreal’s appointment of a new “life transition expert”. While outreach strategies targeting seniors are not inherently bad or ill-willed – it’s important to exercise extreme caution when investing money with someone who markets themselves as a “Retirement Specialist” or “Senior Advisor”.
These designations imply that the advisor has specialized experience, education and credentials and this may not always be the case.
“The danger is that (clients) get lulled into a certain sense of comfort with an organization. Of course, I can’t help but question motive. You’re in the commercial world. People don’t do anything for nothing and they don’t give you feel-good advice without a purpose.” Says Susan Eng, CARP VP of Advocacy.
In their Consolidated Compliance Report for 2011, IIROC (the Investment Industry Regulatory Organization of Canada) announced that they had undertaken a survey regarding the use of titles, designations and other descriptors by Registered Representatives, Investment Representatives and other employees of the Dealer Member firms who deal with investors.
“It is… important that there be rigor, consistency and controls around the use of titles. The objective in the undertaking this survey is to gain a better understanding of:
• The internal firm policies and procedures relating to the use of titles, designations and other descriptors by advisors and other employees in their dealings with investors
the internal approval process of Dealer Members relating to the use of such titles and designations and other descriptors;
• any prerequisite training and proficiency requirements imposed internally by Dealer
Members before particular titles and designations may be used by a firm’s advisors and other employees dealing with investors;
• the internal audit process in place at Dealer Members to ensure that a firm’s policies
and procedures in this area are being adhered to at the firm and its branches;
• the range of titles, designations and other descriptors currently used by advisors and
other employees within Dealer Members who deal with investors; and
• investor complaints received by Dealer Members relating to the use of titles and designations”
Needless to say, there must be some misuse of professional designations or IIROC would not have undertaken this study.
In 2010, the Wall Street Journal published an excellent article on professional designations. Some of the examples they provided sounded almost exactly like the trustworthy designations only they could be earned with very little study and a few hundred dollars.
These newer bargain store credentials were popping up everywhere according to (U.S.) state legislators. The WSJ reported that according to the Financial Industry Regulatory Authority (FINRA) there were 95 professional designations for financial advisors in 2010, up from 48 in 2005. The WSJ was able to find 115 others that were not tracked by regulators.
They also reported on a FINRA study that found that 46% of older investors are more likely to take financial advice from someone who was using a professional designation.
For reference purposes, a guide to the more reputable CANADIAN designations you can look for in a financial advisor can be found here
But if you are curious and want to do your own research you can research the designation yourself by calling your provincial securities regulator and asking them who certifies professionals with this designation and what kind of study is involved.