© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Chronologically Challenged Identification: Senior Designations James Odland, Vice President & Managing Counsel Thrivent Financial for Lutherans David Leifer, ACLI ACLI Compliance and Legal Section Annual Meeting Boston, Massachusetts July 22, 2009

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC : 3 designations 1987: 63 designations 2008: Confusion Around the “Alphabet Soup” of Designations THE AMERICAN COLLEGE

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Scrutiny of Financial Professional Credentials  Media focus on senior financial abuse  “Motel” Designations  Requirements for designations vary enormously  The fact is, consumers are impressed by credentials

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Regulatory Background (Banks)  Nebraska Dept. of Banking and Finance, Interpretive Opinion No. 26 July 31, 2007  Prohibited use (business cards, stationary, advertising, etc.) of designations other than those specifically accepted by the Dept.  15 Designations listed  Applied only to Broker-Dealers and Investment Advisors  Massachusetts, New Hampshire, Virginia and Washington Banking Regulators developed similar approach

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC State Insurance Actions  Iowa Bulletin (Sept. 7, 2007)  List of “Approved” Designations  Dept. to prospectively review designations  Producers not prohibited from using unapproved designations (unlike banking approach)  Insurers specifically held responsible for Producer Designations

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC  Kansas Bulletin (Sept. 26, 2007)  Focused on CSA Designation (Certified Senior Advisor)  Mandates use of CSA Disclosure  Remind Producers they may be violating state law by representing more than their license bestows State Insurance Actions

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Insurer Concerns  Pre-approval of designations would be cumbersome and difficult to administer  If every state developed its own list this would become impossible  Limited effectiveness as designations proliferate  Insurer liability for producer actions

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC NAIC Initial Activities  Insurer and Producer Bulletin (April 2008)  States that NAIC advertisements of Life Insurance & Annuities Model Regulation applies to Designations if utilized in an advertisement – In this case insurer is responsible  Warns producers not to use designations unsupported by a documented program of study

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC NAIC Initial Activities  Seniors Beware – Consumer Alert Regarding Credentials  Also approved Spring 2008  Beware “Free Lunch” Seminars  Question Credentials  Other Consumer Tips

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC NAIC Model Reg on the Use of Senior Specific Certifications and Professional Designations Establishes a standard of whether the use of a particular designation indicates or implies, in a way that misleads the consumer, that the agent has special certification or training in advising seniors Creates what is essentially a safe harbor for designations that:  are not primarily sales/marketing oriented and  are issued/accredited by the American National Standards Institute, the National Commission for Certifying Agencies, or an institution of higher education

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC NAIC Model Reg on the Use of Senior Specific Certifications and Professional Designations Expressly prohibits the use of designations that have not been legitimately earned, that are nonexistent, or that misrepresent a level of expertise or education that does not exist  Exceptions for job titles and areas of specialization  Flag terms such as “senior”, “retirement”, “elder”, certified, “planner”, etc.

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Modeled after NASAA rule on the use of senior designations  NASAA rule adopted in 13 states, proposed in 5 states Approved by NAIC in an expedited manner  Supported by ACLI, NAIFA, AARP, and The American College  Adopted in 4 states, proposed in 9 states NAIC Model Reg on the Use of Senior Specific Certifications and Professional Designations

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC California – Return to a list-based approach – A  Pre-approval by the Commissioner  Approval of both educational topics and hours  Must concurrently display CA license # in any writing that includes a designation  Must be licensed to sell products 4 years prior to use

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC California – Return to a list-based approach  Also Fl law (S. 2082) applies to all designations, not just senior-focused  May not use a designation or title in such a way as to “falsely imply” specialized financial knowledge  CFP, CLU, ChFC, LUTC & securities licenses excepted

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Agent Credentialing... Federal Senate - Senior Protection Legislation 2008  On April 1, 2008, Senator Herb Kohl, (D-WI), Chairman of the Special Aging Committee introduced S. 2794, the “Senior Investor Protection Act of 2008”  The legislation would have established a program of grants to states to investigate and prosecute misleading and fraudulent marketing practices and develop educational materials and training aimed at reducing misleading and fraudulent marketing of financial products (including insurance/annuity products) toward seniors

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Agent Credentialing... Federal Senate - Senior Protection Legislation 2008  Neither the Senate Judiciary or Aging Committee’s took action on this legislation last year  Aimed to encourage state regulators to adopt a uniform standard for the accreditation of senior financial advisors and to assist states in their efforts to protect seniors from being duped by misleading destinations  Industry supported the limits on use of designations, but had concerns with the lack of recognitions for state regulation of suitability and disclosure

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Agent Credentialing... Federal  Sen. Kohl introduced a similar bill (S. 906) in April of this year  Specific reference to NAIC Designation Model  Still problematic because no recognition of NAIC Annuity Disclosure/Suitability Standards

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Other Resources  FINRA Website  List of all known financial designations  SEC Website  Examples of compliance policies  Review training materials of conferring organizations  Verify designations by checking business cards  Maintain lists of approved/prohibited designations

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Other Resources  American College  Six Criteria 1.Title, purpose, use 2.Source of credential 3.Content/examinations 4.Prerequisites & recourse for non- compliance 5.Regulator/market review 6.Benefit to consumers & advisors

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Issues Ahead  More Californias?  NAIC/NASAA models focus on process; not the inherent value of a designation/credential  Only 2 designations have so far gone through the accreditation process: Certified Senior Advisor (CSA) and Certified Financial Planner (CFP)

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Issues Ahead  These 2 designations are far apart in terms of depth of content  Accreditation is time consuming and expensive  Continued focus on insurer responsibility

© AMERICAN COUNCIL OF LIFE INSURERS 101 Constitution Ave., NW, Washington, DC Other Resources  ACLI NAIC Annuity Disclosure, Suitability in Annuity Transactions and Senior Specific Certifications Model Regulation Chart  You can also search for any Senior Designation bill through ACLI’s Legislative Tracker by looking under the keyword: Producer: Senior Designations  Other ACLI material Questions…