Remember when AARP used to send volunteer monitors into free-meal seminars to identify advisor wrongdoing? That move may not have endeared them to financial scammers. However, advisors with nothing to hide didn’t mind having an AARP “Secret Shopper” in their session. Now the 37 million-member affinity group has rolled out another initiative to protect senior investors: AARP Interview an Advisor TM.

The new program is designed to simplify and take the mystery and guesswork out of the process of interviewing and hiring a financial professional. It provides consumers with a short list of suggested questions about advisor’s qualifications, compensation methods, and standard of care. It also includes an introductory script for consumers to kick off their candidate interviews.

Free and available to AARP members and non-members, the online tool is optimized for mobile use. It also can run on any smartphone, tablet, or computer.

“Many people can benefit from working with a financial professional,” said Joseph P. Borg, NASAA president and director of the Alabama Securities Commission. “But they just don’t know where to start when it comes to selecting one. Interview an Advisor provides guidance on the types of questions to ask an advisor and helps frame the discussion to empower investors in the selection process.”

A key goal of the new tool is to spark a frank discussion about an advisor’s fiduciary or non-fiduciary status. “While registered investment advisors serve as fiduciaries who are required to provide advice that is in their clients’ best interest, many other financial advisors operate under different requirements that obligate them only to make recommendations that are ‘suitable,’” said Jean Setzfand, senior vice president, programs, AARP. “AARP’s new interactive guide will help investors avoid confusion about a financial professional’s standards and qualifications.”

Not only does the tool give consumers a questioning track, it also provides the capability to save advisor responses online for AARP and NASAA research purposes. However, to advisors’ relief, it lacks the ability to enter and save a financial professional’s name and contact information.

Advisors will also be happy to hear that the AARP guide includes only 13 questions, most of which are fairly straightforward.

Still, to make sure you’re not caught short, consider reviewing the AARP question list below and think through your answers in advance.

How many years have you been providing financial planning or investment advisory services? Less than 1 year? 1-5 years? 5 or more years?

What licenses or professional designations do you hold? 

Have you ever been disciplined by a regulator?

What financial services do you provide? (Check all that apply):

  • Comprehensive Financial Planning
  • Tax Planning
  • Mutual Fund Selection
  • Business Planning
  • Tax Preparation
  • Brokerage Services
  • Estate Planning
  • Insurance
  • Investment and Asset Management
  • Retirement Planning
  • Education Funding

What types of investments do you offer to clients? (Check all that apply):

  • Stocks
  • Municipal Securities
  • Futures/Commodities
  • Certificates of Deposit
  • US Government Securities
  • Mutual Funds
  • Limited Partnerships
  • Coins or Other Collectibles
  • Bonds
  • Options
  • Insurance Products
  • Direct Participation Programs
  • Other

How often will you meet with me to review my investments?

Are you limited to offering the investment products offered by the brokerage firm with which you are affiliated?

Are the returns on my investment guaranteed?

How are you compensated? (Check all that apply):

  • Percentage of assets under management
  • Commissions and loads for financial products purchased and sold
  • Salary

Will you break out all of your fees and commissions?

Do you charge for services like duplicate copies of investment statements, postage and handling, or transfer on death fees?

Does your relationship with me falls under a “best interests” or a “suitability” standard?


­Whatever your license type—life or health insurance, securities broker, registered investment advisor, property-casualty agent, or real estate broker owner—cybersecurity should top your list of risk-management concerns. As recent news has repeatedly shown, financial professionals of all stripes face increasing cyber risks. And those who continue doing business as usual are setting themselves up for potentially catastrophic outcomes.

­The good news is agents and advisors have two powerful avenues of self-defense: insurance and security best practices.

Now, if  you thought E&O insurance didn’t protect against cyberattacks, you’re not alone. Many financial professionals assume they need dedicated cyberinsurance to receive the most comprehensive protection. And they’re correct. However, you can still receive basic coverage through your E&O insurance policy. Here’s how that works:

Today’s E&O insurance policies not only protect you against the standard risks of making a mistake or failing to do something important, they now also cover you against certain cyberrisks. For example, EOforLess’s life insurance agent E&O has a client network damage and privacy claim endorsement. This means you will have protection against plaintiff lawsuits relating to an alleged electronic infection that harms a client’s network. The loss must result from you providing covered professional services to the client. In other words, if a client picks up a computer virus (and sustains a financial loss as a result) from having accessed your computer network, your E&O policy can indemnify that person or entity within the limits and definitions of your policy (and the specific wording of its network endorsement). However, it’s important to realize that standalone cyberinsurance offers much more comprehensive protection.

What about common-sense security practices? Actually, implementing a surprisingly short list of measures can go a long way toward keeping you and your clients safe. Here are some of the best measures to implement:

    1. Threat awareness. Part of having secure computers and networks is being aware of the threats you face. To this end, follow industry trade publications to stay current on the cyberattacks and breaches financial entities have suffered recently. Also, visit the Financial Services Information Sharing and Analysis Center to learn more about recent incidents.
    2. Secure passwords. Even in this day and age, a surprising number of people still have poor password hygiene. They use their names and birthdays, rely on simplistic words and phrases, and fail to lock down their passwords against prying eyes and thieving hands. By mandating the use of a password management application, you can vastly augment your firm’s cybersecurity. Such apps simply ask you and your staff to remember one master password. Then through an Internet browser extension, they automatically serve up longer, more complex passwords when you visit websites. This means you’ll no longer need to know or save potentially hundreds of passwords.
    3. Multi-factor authentication (MFA). MFA is a security approach that depends on two or more methods of authenticating a user’s identity before allowing a log-in or other transaction. It typically combines what the user knows (i.e., a password), what the user has (a security token or code), and what the user is (biometric verification as in a smartphone’s built-in fingerprint reader). Having multiple security layers makes it harder for intruders to break into a device or network, since they need to have not only your password, but also your token device and biometric data.
    4. Security best practices. A large number of cyberbreaches occur due to employees’ unsafe computing practices. For example, they often fall prey to e-mail phishing attacks in which they clink on a URL within an email. This then infects their computer with a virus or other code that can lead to unauthorized break-ins. Even worse, online criminals now use increasingly plausible approaches to dupe employees into clicking on malicious links. Solution? Constant employee training on security awareness and best defensive practices.
    5. Data encryption. Make it your business to learn how to encrypt all client data before sending it over e-mail or via other channels. This is a critical element for safeguarding business and customer data.
    6. Destroy old hardware. If you are disposing of obsolete computers or other devices, make sure to magnetically erase the equipment. Otherwise, criminals may find a way to access the data on the computers or devices and use it to perpetrate a breach to your current hardware and networks.
    7. Install  software patches (updates). As the latest cyberattacks are foiled, computer and system vendors typically update their software to fix bugs and close back doors that lead to breaches. However, if you don’t take advantage of those updates, your data will remain susceptible to attack.

The point is this: Cybersecurity is no longer the province of information technology (IT) professionals. Insurance and financial advisors need to stay abreast of the latest threats and adopt protective measures as soon as possible. By keeping informed, adopting best practices, and relying on their E&O and cyberinsurance policies as backstops, they should be well protected against potentially devastating cyberattacks. Good luck!

Prospecting seminars have been a core financial-services marketing strategy for years, if not decades. And they remain one today despite the emergence of new technologies (the Internet, social media, mobile, etc.) that may reduce the need for such programs.

What’s more, they still exist despite regulatory efforts to dial them back. The last big wave of tightening occurred in the Oughts when annuity marketers aroused regulatory ire for misrepresenting their wares during free-lunch seminars. After regulators clamped down on abuses, seminar regulation remained stable  until 2016, when regulators attending a Securities Industry and Financial Marketing Association conference expressed concerns that pockets of seminar wrongdoing continued to plague the industry.

Recently, the National Association of Insurance Commissioners has again trained its focus on agent seminar conduct, issuing a new Consumer Alert (see pg. 103 of PDF) that explicitly warns the public about what it believes are the dangers of attending an agent-sponsored seminar presentation.

Specifically, the NAIC decided to warn more categories of prospects (from seniors to all consumers) about more types of seminars (from “free-lunch” seminars to all types of seminars with free meals), and about more seminar subjects (from financial products designed to capture savings to any session about financial, retirement, or estate planning.)

The NAIC alert also issues more pointed warnings about seminars, including:

  • Be skeptical about “free meal” educational sessions.
  • Do your homework before attending a seminar or meeting with an agent.
  • Carefully review agent/advisor credentials before attending.
  • Think hard about whether the product or service to be discussed makes sense.
  • Refrain from making a final purchase decision at a seminar.
  • Report a suspected scam to the state insurance department.

Although it’s easy to see why regulators want consumers to be skeptical, what they may not see is how their efforts can place unreasonable sales barriers in front of responsible agents. By creating so much consumer fear, uncertainty, and doubt, they run the risk of shutting seminars down, forcing agents to use other methods to generate prospects.

So what now? As always, the National Ethics Association recommends you provide your prospects only with compliant and ethical seminar content. Here are some specific pointers for making sure this happens:

  • Whether a marketing technique generates a return on investment and whether it’s ethically and legally appropriate are two separate questions. Don’t confuse them. Work hard to execute seminars your prospects will value. But don’t let marketing ROI justify shady seminar marketing or content.
  • Follow all solicitation rules regarding seminar promotion. In other words, fully identify yourself as an insurance agent and/or a financial advisor in your seminar advertising, e-mails, and direct mail. Do not claim to be a university finance instructor just to get people into your seats. This is misrepresentation, period.
  • When you’re at the podium, never say anything that isn’t 100 percent accurate. And make sure all your visuals are true and fully sourced.
  • Consider using pre-packaged seminars from financial publishers and/or FMOs. But vet the content carefully, since you will be on the hook for it.
  • Submit your seminar content—script, visuals, handouts, advertising, etc.—to your registered principal, RIA, or insurance-company compliance officer for approval.
  • Always ask yourself, “Is my seminar based on the principles of fair dealing, good faith, and balance.”
  • When discussing the workings and potential results of an investment or insurance product, be careful not to overstate its safety, liquidity, or anticipated returns.
  • Never hide or misrepresent the identity or credentials of any product sponsors who may have provided financial contributions to your seminar-marketing program.

Finally, and perhaps most importantly, when conducting seminars for lead generation, always view yourself more as an educator than as a salesperson. You want your seminar content to be so useful, actionable, and motivating that attendees will seek you out afterward for a free initial consultation. Let your content do your selling, not your selling!

In short, the best way to respond to regulatory scrutiny of your seminar marketing is to become a better seminar marketer. How? By doing them for the right reason, in the right way, and in full compliance with ethical and legal guidelines. Do all that and we’re confident your seminars—and you—will be just fine!

Grousing about new compliance regulations is common among financial professionals. After all, new rules can cost them a lot of time and money without necessarily producing positive results for consumers. But in the case of FINRA’s new rule giving the industry more tools for dealing with senior financial exploitation, both advisors and their product manufacturers are mainly positive.

According to FINRA’s Regulatory Notice 17-11, the SEC-approved rule about financial exploitation of seniors takes effect on February 5, 2018. It now lets advisors and firms implement two key steps to protect investors. First, they will be required to make reasonable efforts to secure the name and contact information for a trusted contact person for each customer account. Second, they will now have the flexibility to place a temporary hold on requested cash or securities disbursements if they reasonably suspect senior financial exploitation is taking place.

The new rule will provide firms with tools to respond more quickly and effectively to protect seniors from financial exploitation,” says Robert W. Cook, FINRA President and CEO.

Under the first measure, securities brokers will gain the ability to reach out to another person if there are problems contacting the account holder or if the broker suspects exploitation. However, this will depend on the client electing to voluntarily provide the contact information. Although brokers are required to ask for the information, clients are not forced to comply.

What’s more, brokers must not release any confidential account information to the trusted person, instead only asking the person to contact the client to make sure everything’s alright.

Regarding the second measure, brokers and firms will now have the ability to place a 15-day hold on any requested withdrawals from a senior’s account in the event of suspected exploitation. They can extend the hold for an additional 10 days if they need more time to investigate the matter.

Although the rules will presumably give brokers and their firms the time to look into potential problems with a senior account, it does not mandate reporting to law-enforcement or adult-protective authorities.

Although securities brokers and their firms generally like the new requirements, it’s important to note they do not apply to non-securities licensed professionals such as registered investment advisors or life insurance agents. They also don’t apply to transfers between securities accounts, only to disbursements, which is a significant loophole. Finally, FINRA did not address cases in which the trusted contact in fact is the source of the problem.

Bottom line from the National Ethics Association, sponsor of EOforLess: Financial professionals play a key role in keeping America’s seniors safe in the financial-services arena. FINRA’s new measures will have a significant impact on their ability to do just that, while reducing potential E&O insurance exposures.