Check the Credentials of Senior Advocates

by Mark A. Krohn, Esq., Partner
Jacobowitz & Gubits, LLP

Carefully check the credentials of individuals holding themselves out as “senior advocates.” Individuals may call themselves a ‘senior advocate’ to create a false level of comfort among seniors by implying a certain level of training on issues important to the elderly. But the training they receive is often nothing more than marketing and selling techniques targeting the elderly. These sales people and the alphabet soup of letters after their names can be confusing, and in some cases, may even be deceptive to seniors.

The North American Securities Administrators Association (NASAA) has announced that it has observed a significant increase in designations claiming to provide the holder with expertise in providing services to investors 55 years and older. Securities regulators have opened numerous cases in the past year involving “senior advocates” in the eastern half of the United States alone. Most of the cases involve securities recommendations by individuals who are not properly licensed by state securities regulators. Complaints about seniors being taken advantage of by scammers and is taking actions available under the law to protect these seniors.

Bogus senior advocates commonly target senior investors through seminars where the advocate reviews seniors’ assets, including securities portfolios and typically recommends liquidating securities positions and using the proceeds to purchase indexed or variable annuities products or other investments the advocate offers.

In many jurisdictions, these recommendations may be viewed as providing investment advice for compensation. In New York, Investment Advisors are registered by the state, as are Insurance Counselors. The senior advocate may be offering investment advice as an unregistered investment adviser and, therefore, be subject to enforcement action by the state.

Although there are legitimate organizations whose members must complete rigorous programs of study, pass extensive examinations, and have practical experience in order to receive their designations (i.e. Tax Attorneys, Certified Public Accountants (CPA’s), Certified Financial Planners (CFP’s), registered security agents), a number of entities formed in the last few years have created designations with much less stringent requirements. Without reviewing the course material for each of these designations, it is difficult to verify the claims made by the promoters.

Before doing business with any investment professional, all investors, especially senior investors, should contact the NYS Attorney General by email ([email protected]) or toll-free at Crime Victims Hotline: 1-800-771-7755 to determine whether the individual is properly licensed and if there have been any complaints or disciplinary problems involving the individual or his or her firm.

The New York Attorney General’s website and the Senior Investor Resource Center on the NASAA website at www.nasaa.org have additional investor education and protection tips for seniors.