A proposed rule by the North American Securities Administrators Association for ensuring the legitimacy of senior-specific designations by finance professionals has drawn concerns from insurance professionals regarding how it would be implemented and enforced.
In a comment letter to NASAA, Gary Sanders, general counsel for the Association for Advanced Life Underwriting, questioned whether the proposed rule would run into the same problem many other proposed rules run into, a lack of uniformity as it is enacted from state to state.
“If the designation issue is going to be addressed at the state level, the states must work together to ensure that the requirements and standards governing the use of designations are uniform from state to state and are interpreted and implemented uniformly across the country,” Sanders said. “Although we believe nationwide statutory and regulatory uniformity and consistency is important across the board, it is particularly necessary in the area of certifications and designations.”
As an example, Sanders noted that it would difficult for a financial advisor to keep track of what states allowed which designations and of the differing standards for such designations among the states.
NASAA is composed of provincial and territorial securities administrators from throughout North America, and Sanders reminded them that many financial advisors fall under other regulatory jurisdictions than theirs. “Nationwide uniform rules will require coordination and cooperation not only among the various state securities administrators, but with other state regulators,” he said, adding that members of the National Association of Insurance and Financial Advisors “are not only investment advisors; they are also insurance producers subject to regulation by the state insurance commissioners.”
The concern about including insurance regulators in the rule-making process was shared by the American Council of Life Insurers. “Because many investment advisors are also life insurance producers, we believe it is critical that NASAA coordinate its rule-making activities” with those of the National Association of Insurance Commissioners, said ACLI President Frank Keating in a comment letter to NASAA.
“Absent such coordination, there exists the very real risk that a professional designation or certification will be deemed appropriate by one regulatory body, and the same designation or certification proscribed by another. This would create a confusing situation for consumers, and a very unfair result for the professional holding that particular designation or certification.”
The proposed NASAA model rule was designed to combine various regulations that are already in place or under consideration in other jurisdictions. It would prohibit individuals from misleading consumers through the use of a “senior” designation, while giving regulators the ability to recognize those designations that have been accredited.
Both the ACLI and NAIFA sought in their comment letters to associate themselves with more specific concerns raised by the American College.
In the College’s comment letter, Walt Woerheide, vice president of academic affairs and dean, asks NASAA to ensure that certain provisions in the bill specifically use the term “senior-specific” to identify which designations are affected, and then ensure that those designations come with an ethic requirement. “We feel an ethics code is imperative for senior-related credentials, as it provides another basis for removing a designation in the event of any concerns regarding an advisor’s behavior in the marketplace.”
The college also proposed changes to the model that it argued would better ensure that the certification of a senior-specific designation would reflect on the level of expertise required to obtain that designation.
Overall, Woerheide said the College supports the ultimate goal of what the NASAA model proposes to accomplish, but that its effort could be improved if the college’s proposed changes are made.
“We feel you are close, with these important changes,” he said, “to creating an approach that will work exceptionally well.”