In the context of all the damage that the investment/retirement complex can wreak on their captive investors, what follows would scarcely move the needle.

I refer to the industry’s common practice of distributing ghost-written newsletters to their clients.

FINRA (the Financial Industry Regulatory Authority) opines that the practice “appears to raise serious questions about whether they comply with principles of fair dealing and good faith.”

I guess FINRA is trying to burnish their regulatory credentials, but you have to wonder, after the financial markets meltdown that resulted from a virtual abandonment of oversight and regulation, why they are going after such a small potatoes sin.

It goes back to one of the twisted maxims of war. After the battle, it is traditional to go out on the battlefield and shoot the wounded.

And this practice has only been going on for a half century of so.

The issue is that the sponsoring firm just slaps their name and logo on generic market newsletters wholesaled out of specialty promotional firms.

I wouldn’t normally single this practice out for abuse, as I have such a high level of contempt for the entire industry marketing steamroller, whose core message is simply this:

Trust us. Give us all your money. We know what to do, and you haven’t got a clue. Go out and play golf. And send us more money again.

Targeting Seniors

No, what alarms me, and FINRA, is that this practice is linked to the upsurge in targeting marketing to seniors. And seniors have the time and inclination to read this type of material, and to trust those who claim to be the authors.

That fits hand in glove with their theme. To gain trust that is not deserved, and to slam the seniors into high-commissioned annuities, and have them cash out of valid retirement accounts so that the proceeds can buy outrageously expensive cash value insurance.

The trend in the industry is to add one of the many “senior advisor” credentials to their reps so as to lull their targeted demographic into thinking that this would signify some real expertise.

The reality is that most of these designations are marketing ploys, some involving just a weekend of classes or a few on-line assignments. And the designation is redundant and superfluous, provided you get advice from someone who has already earned their CFP(r), Certified Financial Planner designation.

Behind the CFP®

The CFP® is not a designation earned casually. It requires in depth education and training, and has a stiff failure rate on its 10 hour comprehensive examination.

You’d be amazed at the number of practicing lawyers and CPAs who do not survive the final cut, not to mention the old wirehouse broker warhorses trying to re-brand themselves.

There are upwards of one million financial advisers nationally, but only 55,000 have earned this designation. The pressure to gain this credential is intense.

And only a tiny minority of those 55,000 publish daily blogs to help educate the public about the intricacies of wealth management, while exposing the conflicts and chicaneries of the industry. And some of us even write our own commentary.

Just having the CFP® designation is not a perfect screen to weed out less knowledgeable advisers.

But it’s as good as any place to start.

Posted: 06|12|08 at 6:24 am. Filed under: financial services providers, scams and scandals.
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