An industry debate over the value and use of professional credentials and the preparation offered prior to their use is being renewed following a July 8 article in The New York Times.
The article explored purportedly abusive sales practices in the marketing of annuities to seniors and the proliferation of less than rigorous educational programs for insurance and financial advisors.
A chief focus of the story was the Certified Senior Advisor designation, which Massachusetts prohibited most financial advisors from using this year unless they were recognized by an accreditation organization or state. However, most states continue to allow advisors to use CSA and other credentials when marketing their services. That fact, buttressed by the allegedly substandard curriculum and exams highlighted in the Times piece, point up the need for heightened oversight of professional credentials by regulators and the insurance industry, say sources interviewed by National Underwriter.
“The confusion caused in the marketplace by the myriad of designations for insurance professionals certainly is an issue that needs to be reviewed,” says Jack Dolan, a spokesman for the American Council of Life Insurers, Washington. “It is fair to say that the Times article on credentialing has been the topic of significant additional discussion at ACLI.”
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Adds Tom Potts, a certified financial planner and a professor of finance at Baylor University, Waco, Texas: “I totally agree that we have too much of an alphabet soup with respect to credentials. Many of them serve no purpose beyond being marketing tools. For a fee, advisors get to put letters behind their name on a business card.”
The credentials referenced as “less rigorous” in the Times article — certified retirement financial advisor, registered financial gerontologist, certified retirement counselor and certified senior advisor –generally entail courses that can be completed at designated locations over a period of days or through online self-study. And all focus to varying degrees on the burgeoning retirement planning market.
Ensuring the validity of credentials is a matter of ongoing debate. The Financial Planning Association, Denver, supports a proposal of the Massachusetts Securities Division to limit the use of designations to those that “meet a commonly understood baseline,” such as accreditation by the National Commission for Certifying Agencies, according to a FPA letter directed to the division in October of 2006. The FPA additionally recommends that the Securities Division collaborate with the state’s Division of Insurance to “ensure that similar prohibitions on the use of misleading designations are imposed on insurance agents.”
The FPA’s call for such restrictions has not extended beyond Massachusetts. But state authorities contacted by National Underwriter say they are exploring similar limitations or ways to enhance regulatory oversight of sales practices.