Mass. limits use of senior credentials
Massachusetts security regulators have adopted rules aimed at protecting older investors from harmful financial advice, which could serve as a model for other state regulators.
The rules, which the Massachusetts Securities Division says are the first of their kind, limit financial advisors' use of credentials indicating an expertise in the financial needs of senior investors.
State and federal regulators are concerned that senior citizens are particularly vulnerable to unscrupulous financial advisors or misleading advice, due in part to the number of credentials available to financial advisors and the lack of transparency about what those designations actually mean.
Beginning June 1, financial advisors can use only senior designations that have been accredited by a national agency recognized by Massachusetts, the regulators said Wednesday.
The North American Securities Administrators Association, which represents state securities regulators, plans to develop similar guidelines by the end of the year and recommend their adoption to other states, association President and Alabama Securities Director Joe Borg said in an interview.
"We're trying to make accreditations meaningful so people can understand" the training and ethical standards required of designees, Borg said.
To avoid a hodgepodge of regulation, NASAA had asked states to hold off on creating their own rules on senior credentials until first-mover Massachusetts spelled out its plans, Borg said. NASAA plans to review the Massachusetts rules in detail and confer with financial service and senior citizen organizations before issuing its own guidelines.
The Society of Certified Senior Advisors, which offers the "certified senior advisor" designation, plans to comply with Massachusetts' accreditation rules, spokesman Dan Banbom said. The society isn't convinced, however, the stricter standards will offer more protection to investors, he said.
About 13,000 individuals hold the CSA designation, just a fraction of which work as securities and commodities brokers.
The society will require individuals who hold the designation to begin disclosing next year that they don't necessarily have any special expertise in financial planning for senior citizens. The organization started including the disclosure on its marketing materials early this year.
The new Massachusetts regulations govern use of credentials and professional designations that use words such as "senior," "retirement" and "elder" in combination with words such as "certified," "advisor" and "specialist" to imply an expertise in advising senior investors. The term "senior investor" refers to someone 65 years of age or older. (Dow Jones)
