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May 3, 2007
SECRETARY OF STATE WARNS SENIORS
The Massachusetts Secretary of State has gotten tired of so-called “Certified Senior Advisors” running seminars such as the “Senior Financial Survival Workshop”. Gee, what could be wrong with certified advisors giving seniors information on financial survival? Let’s take it step by step.
Is your advisor a “Certified Elder Planning Specialist” (“CEPS”), or a “Certified Senior Advisor” (“CSA”) ? These designations, according to the Massachusetts Secretary of State are meant to mislead the elderly and disguise the fact that these “certified” advisors are merely insurance and annuity salesmen.
Let’s compare the requirements necessary to earn some of the more common “certified” designations:
Certified Senior Advisor (CSA) – This requires either attendance at a three and one-half day course followed by a multiple choice examination, or a home study course. The home study course allows participants to select their own proctor for the examination.
Chartered Financial Analyst (CFA) – This requires 250 hours of independent study and to take and pass Level 1, II, and III exams. Exams are 6 hours long. Applicants must have 4 years of work experience. Members must annually complete a Professional Conduct Statement disclosing any allegations of misconduct, litigation or consumer complaints.
Certified Public Accountant (CPA) – This requires a bachelor’s degree with certain required courses in business and law, 1 year work experience and passing a two and one-half day long exam. Required 40 hours of continuing education per year.
OK, I guess you have to agree that becoming a Certified Senior Advisor is not too hard, but one of the perks to earning this designation is access to its unique marketing system that includes the so-called “Senior Financial Survival Workshop”. The objective of these workshops is to identify seniors who can be convinced to convert their assets into annuities. In March 2007, the Massachusetts Secretary of State filed suit against “CSA” Michael Delmonico. In 2005 Mr. Delmonico made over $700,000 by advising seniors to sell all of their investments and purchase annuities and other financial products.
Before you sell all of your investments to purchase an equity-indexed or other type of annuity consider this:
1) Annuities are typically taxed at ordinary income tax rates, not the lower capital gains rate that mutual fund and stock distributions and dividends pay.
2) Mutual funds and stocks get a step-up in basis upon death, annuities do not.
3) Most annuities have a lock-up period and large surrender fees, typically 9-15% in the first year and decreasing over time.
A Piece of Pie is wholesome and all American, so why is the Secretary of State against it? Well, if you go to PieceofPie.com, you will find out how there is someone to help you scam your local seniors out of their money. Michael Kaselnak, the founder, claims to have had 237 seniors give him ALL of their money over a 2 ½ year period, earning close to $2 million in commissions. Here is how the Piece of Pie works:
The Piece of Pie marketing system starts off with a free lunch or dinner seminar and multiple meetings (all scripted by Piece of Pie) attempting to convince the potential client that he is acting as their advisor to begin the process of gaining their trust. After the salesman has gained their trust he advises them to sell all of their assets and buy annuities.
Back in 2002, the Secretary of State sued Brokers Choice of America whose training manual said, the best way to target seniors is to “Assume that you are selling to: A 12 year old who is blind yet smart.”
My advice is that if someone is offering seniors a seminar with a free meal and claims that he is some kind of expert that can eliminate taxes, probate and can cure the common cold, walk away very quickly. Before liquidating your lifetime savings to purchase annuities or other financial products, ask friends and family for advice.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org