Thursday, July 12, 2007

One CSA's Response to The Designation Issue

Todd's response to the NY Times articles on designations.. Thought it deserved a little more space, since this is a hot topic lately. Interested in hearing from more CRFA's, CSA's, CFP's, etc. etc. advisorresource@ontrackmoney.blogspot.com. Coming up on the blog: More about Leads, breathing life back in to seminars, using technology to increase your productivity.


Tammy,

Unlike the person responding to the NY Times article, I do know quite a bit about CSA (and other such designations)... I have a CSA so I can tell you from first hand experience that what you learn from that designation will NOT help you provide better financial services to retirees...

It will help you better understand what it is like to be a senior citizen, but it falls woefully short of providing tools necessary to help them with their financial needs.

That said, the education needed to get a CFP also falls short in this area... I've studied all of the CFP materials in anticipation of getting the designation and I quickly learned that it is severely lacking when it comes to helping people make sure that they have enough $$$ to last... It's great if you want the tools to help people accumulate wealth over their lifetime... Just not quite as good at providing the tools for the distribution phase...

So, I absolutely agree with the NY Times article in that it is painfully clear to me that designations like CSA are being misused to project an image that is intended to give retirees a feeling that they are dealing with an "expert" in their situation.

Is that CSA's fault?? Absolutely not. I think that the 'fault' is that of the insurance companies by offering such rediculously high commissions that life insurance agents try to step into the role of financial advisor armed with only the annuity as a tool...

What do I think should be done about it? Well, I've got a few ideas (that aren't too popular with my annuity selling friends ;-)

1. Increase the free-look period to 12 months for annuities sold to people 60+

2. Require that people 60+ be offered the option of selecting the "no surrender-charge" annuity instead of only being offered the one with the long surrender charge (and highest commissions)

3. Create an industry-wide compliance document that would be required on any annuity sale (similar to what I have to fill out when I sell a Variable Annuity) that spells out things like Liquid Net Worth, Total Net Worth, Total % in annuities, etc and then require the insurance company suitability dept to review every application (this would stop the situations that I see every day where 100% of a retirees liquid cash is placed in an EIA because it is 'safe').

Sorry for being so long winded on this, but having more oversight in the financial services world is something that I feel very strongly about.

July 11, 2007 7:45 PM

1 comment:

Scott aka Florida Native Musings said...

Tammy,

I somewhat agree with the comment just left by the Fellow Registered Broker.

Most Fixed annuities in my experience have been sold by agents for the commission with a myriad of forms that the majority "seasoned citizen" is supposed to understand. The whole idea that the more signatures you get from the client stating they understand the whole product is useful if they come back at you at a later point and object to the purchase.

As someone who has sold both products, VA's and FA's, I would share that more times than not the client has to be resold the basis for buying the Longer Surrender Term EIA more than the Variable Product.

There will be some blowback from this NYT article and it will cause some State Commissioners to address how these are sold. In my state of Florida, we have a Suitability Form that must be signed and spelled out listing at least Net Worth, Income, Tax Bracket, Other Annuities Owned and so on...but I feel to be better served the Insurance Companies should Step Up and enforce Stronger Compliance on the Front End when a App is sent in from the Field Force. Some Do. Most Do Not. It's just issue the policy, pay the Agent and Move on and it's now biting us in the A--.

As the old saying goes, a few bad apples have spoiled the bunch.