Kohl Introduces Bill to Protect Seniors’ Investments
Sen. Herb Kohl (D-Wis.), chairman of the U.S. Senate Special Committee on Aging, and Sen. David Vitter (R-La.) introduced a bill Tuesday night to offer states the resources necessary to protect seniors from unscrupulous financial advisors who prey on the retirement savings of the elderly by touting misleading or fraudulent “senior designations.”
The Senior Investor Protection Act of 2008 would create a new grant program 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 these misleading designations. Many seniors targeted by salespeople using these designations have lost their life savings because they were steered toward investment instruments that were unsuitable for them, given their retirement needs and life expectancy, Kohl said.
Last September, Kohl held a hearing to examine some of the questionable practices used by so-called senior financial investment specialists in order to gain access to the retirement savings of older Americans. An investigation conducted by the Aging Committee revealed that many of the designations that have been cropping up represent limited or no value with respect to advising seniors on financial matters, and that often the designations are obtained simply by attending a weekend seminar and passing an open-book, multiple-choice test. “We know that an attorney must go to school for three years and pass a state bar exam. A CPA must have a college degree, an additional year of study and must pass a national exam. Neither can offer their professional services without those credentials,” Kohl said. “Seniors should be able to trust the people who invest their money. They should not be worried that the title after their advisor’s name is scarcely more than a marketing ploy, and that it was not earned through sufficiently rigorous financial education or training.” “Every service provider should be accountable for the work they offer -especially when that service regards the life savings and investments of our seniors. This bill encourages states to enact regulations that promote more accountability and protections to help seniors identify ethical businesses and avoid scams,” Vitter said.
The bill would provides states with incentives to improve their own rules regulating the use of designations by encouraging them to adopt provisions outlined in the North American Securities Administrators Association’s (NASAA) new model rule on the use of senior designations. The legislation has been endorsed by NASAA, The American College, and the Financial Planning Association.