Some of the fancy titles being used by investment advisors may not mean much. It can be hard to tell whether those initials after someone's name mean they completed a rigorous program of study, passed extensive examinations and have the practical experience required to qualify to receive their designation. Or, did they just pay a few dollars for a fancy designation on their letterhead and the certificate on the office wall?
The criteria used to grant such designations varies greatly. That's why financial industry regulators are increasingly concerned about the use of hollow professional designations that suggest an expertise that may not exist. They are concerned that some individuals are misusing these designations to provide a false sense of security to their customers.
The North American Securities Administrators Association's (NASAA) Investment Advisor Operations Project is working with state securities commissioners to bring enforcement actions against individuals in many states who claim to be senior specialists, but are not. NASAA issued a model rule in 2008 that made it a separate violation to use a designation or certification to mislead investors. Several states have adopted new laws stopping misleading designations.
How You Are Affected
You are among an unprecedented number of investors who are at or nearing retirement age. As your demographic group grows, so will the number of investment professionals who want to help you manage your money. Some hope that they will stand out from the crowd and get your business by claiming to be a certified senior advisor, chartered senior specialist, registered retirement specialist, wealth manager, financial gerontologist or any of a number of designations.
You need to do your homework before putting your money in the hands of someone who has more titles than expertise, or seeks to impress you with credentials that don't represent any significant training or experience.
Check Out Those Initials
The Financial Industry Regulatory Authority (FINRA) has a directory of professional designations. All you need to do is search by the designation or initials. You'll find the certifying organization; education and experience requirements; any disciplinary process; and how to file a complaint.
Contact the issuing organization. Contact information is on the FINRA directory. Ask if the individual is authorized to use the designation and whether he or she has ever been disciplined.
More Ways to Check Out a Professional
Check with your state securities administrator. You can find them on the NASAA website.
Report anyone that tries to sell you an unsuitable investment. Your state regulators want to know.
Report a violation of the securities laws directly to enforcement@sec.gov.
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