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Chronologically Challenged Identification: Senior DesignationsJames Odland, Vice President & Managing CounselThrivent Financial for Lutherans

David Leifer, ACLI

ACLI Compliance and Legal SectionAnnual MeetingBoston, MassachusettsJuly 22, 2009


Comprehensive Designation Timeline (1927-2008)

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s1927: 3 designations

1987: 63 designations

2008:

Confusion Around the “Alphabet Soup” of Designations

THE AMERICAN COLLEGE


Scrutiny of Financial Professional Credentials

Media focus on senior financial abuse

“Motel” Designations Requirements for

designations vary enormously

The fact is, consumers are impressed by credentials


Regulatory Background (Banks)Nebraska Dept. of Banking and Finance, Interpretive Opinion No. 26 July 31, 2007

Prohibited use (business cards, stationary, advertising, etc.) of designations other than those specifically accepted by the Dept.

15 Designations listed

Applied only to Broker-Dealers and Investment Advisors

Massachusetts, New Hampshire, Virginia and Washington Banking Regulators developed similar approach


State Insurance Actions

Iowa Bulletin 07-05 (Sept. 7, 2007) List of “Approved” Designations Dept. to prospectively review

designations Producers not prohibited from

using unapproved designations (unlike banking approach)

Insurers specifically held responsible for Producer Designations


Kansas Bulletin (Sept. 26, 2007) Focused on CSA Designation

(Certified Senior Advisor) Mandates use of CSA Disclosure Remind Producers they may be

violating state law by representing more than their license bestows

State Insurance Actions


Insurer Concerns

Pre-approval of designations would be cumbersome and difficult to administer

If every state developed its own list this would become impossible

Limited effectiveness as designations proliferate

Insurer liability for producer actions


NAIC Initial Activities

Insurer and Producer Bulletin (April 2008)

States that NAIC advertisements of Life Insurance & Annuities Model Regulation applies to Designations if utilized in an advertisement – In this case insurer is responsible

Warns producers not to use designations unsupported by a documented program of study


NAIC Initial Activities

Seniors Beware – Consumer Alert Regarding Credentials

Also approved Spring 2008

Beware “Free Lunch” Seminars

Question Credentials

Other Consumer Tips


NAIC Model Reg on the Use of Senior Specific Certifications and Professional Designations

Establishes a standard of whether the use of a particular designation indicates or implies, in a way that misleads the consumer, that the agent has special certification or training in advising seniors

Creates what is essentially a safe harbor for designations that:

are not primarily sales/marketing oriented and

are issued/accredited by the American National Standards Institute, the National Commission for Certifying Agencies, or an institution of higher education



Expressly prohibits the use of designations that have not been legitimately earned, that are nonexistent, or that misrepresent a level of expertise or education that does not exist

Exceptions for job titles and areas of specialization

Flag terms such as “senior”, “retirement”, “elder”, certified, “planner”, etc.


Modeled after NASAA rule on the use of senior designations

NASAA rule adopted in 13 states, proposed in 5 states

Approved by NAIC in an expedited manner

Supported by ACLI, NAIFA, AARP, and The American College

Adopted in 4 states, proposed in 9 states



California – Return to a list-based approach – A. 2150

Pre-approval by the Commissioner

Approval of both educational topics and hours

Must concurrently display CA license # in any writing that includes a designation

Must be licensed to sell products 4 years prior to use


California – Return to a list-based approach

Also Fl law (S. 2082) applies to all designations, not just senior-focused

May not use a designation or title in such a way as to “falsely imply” specialized financial knowledge

CFP, CLU, ChFC, LUTC & securities licenses excepted


Agent Credentialing ... Federal

Senate - Senior Protection Legislation 2008

On April 1, 2008, Senator Herb Kohl, (D-

WI), Chairman of the Special Aging Committee introduced S. 2794, the “Senior Investor Protection Act of 2008”

The legislation would have established a program of grants to states to investigate and prosecute misleading and fraudulent marketing practices and develop educational materials and training aimed at reducing misleading and fraudulent marketing of financial products (including insurance/annuity products) toward seniors



Senate - Senior Protection Legislation 2008

Neither the Senate Judiciary or Aging Committee’s took action on this legislation last year

Aimed to encourage state regulators to adopt a uniform standard for the accreditation of senior financial advisors and to assist states in their efforts to protect seniors from being duped by misleading destinations

Industry supported the limits on use of designations, but had concerns with the lack of recognitions for state regulation of suitability and disclosure



Sen. Kohl introduced a similar bill (S. 906) in April of this year

Specific reference to NAIC Designation Model

Still problematic because no recognition of NAIC Annuity Disclosure/Suitability Standards


Other Resources

FINRA Website

List of all known financial designations

SEC Website

Examples of compliance policies Review training materials of conferring

organizations Verify designations by checking

business cards Maintain lists of approved/prohibited

designations


Other Resources

American College Six Criteria

1. Title, purpose, use 2. Source of credential3. Content/examinations4. Prerequisites & recourse for non-

compliance5. Regulator/market review6. Benefit to consumers & advisors


Issues Ahead

More Californias?

NAIC/NASAA models focus on process; not the inherent value of a designation/credential

Only 2 designations have so far gone through the accreditation process: Certified Senior Advisor (CSA) and Certified Financial Planner (CFP)


Issues Ahead

These 2 designations are far apart in terms of depth of content

Accreditation is time consuming and expensive

Continued focus on insurer responsibility


Other Resources ACLI NAIC Annuity Disclosure,

Suitability in Annuity Transactions and Senior Specific Certifications Model Regulation Chart

You can also search for any Senior Designation bill through ACLI’s Legislative Tracker by looking under the keyword: Producer: Senior Designations

Other ACLI material

Questions…

Documents

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