Earlier this month, FINRA released a Regulatory Notice to remind broker-dealer
firms of "their supervisory obligations regarding the use of certifications
and designations that imply expertise, certification, training or specialty
in advising senior investors (senior designations)."
Currently, there are around 44 different senior designations used by registered
representatives in the United States. Over the past few years, as an
ever-increasing number of confusing and misleading professional credentials
have entered the market, regulators increasingly have become concerned over the potential for
misuse and deception, particularly when it comes to senior investors.
The Massachusetts Securities Division, for example, filed a regulatory
enforcement action against Brokers Choice of American (BCA) and Senior
Benefit Centers Network (SBCN) in which the Division alleged that the
BCA and the SBCN "fraudulently touted their financial planning skills,
investment expertise and knowledge" and "used such specious
titles as ‘Certified Elder Planning Specialists’ to mislead
the elderly and disguise the fact that the associates were simply insurance
To determine whether firms were adequately supervising the use of such
"specious titles," FINRA conducted a 2011 senior designation
survey. Based on the survey’s results, FINRA determined that approximately
two-thirds of broker-dealer firms permitted registered representatives
to use some sort of "senior designation." Unfortunately, the
survey also revealed that many of those designations lack rigorous qualification
standards and/or adequate supervision.
"As a result," wrote FINRA, "a designation did not ensure
that those registered persons holding the designation possessed financial
services skills that were unique or valuable to senior investors."
This could open the door to elder financial abuse and investment fraud,
because most investors cannot tell the difference between a legitimate
professional designation and "a designation that is simply a marketing
To help ensure investors are protected from dubious designations, FINRA
recommended firms prohibit the use of designations that do not require:
- A rigorous curriculum;
- An emphasis on ethics;
- Continuing education;
- Demonstrable experience, and
- A public disciplinary process.
Whether or not firms will follow FINRA’s recommendations remains
to be seen.