The article incorrectly said that the Financial Planning Association administers training for certified financial planners. The certification program is administered by the Certified Financial Planner Board of Standards, an independent professional organization.
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Investment Pitches Prey On Elderly
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Representatives of Javelin, which is based in California, did not return calls for comment. Nor did the insurance salesman in Pennsylvania who directed Moyer to a long-term investment months before he died.
In the past few years, state authorities in Massachusetts, Minnesota and elsewhere have filed lawsuits against sales representatives and numerous companies including Allianz Life Insurance Co. and Investors Capital Corp., alleging misleading marketing pitches or failure to stop deceptive sales tactics.
"Most of these scams are just a way to gain trust -- empty marketing devices," said Joseph Borg, the chief Alabama securities regulator, who also leads a national coalition sounding alarms over the problem.
Nearly half of the complaints state watchdogs receive are made by seniors who fear they have been the victims of fraud or misleading sales practices. The North American Securities Administrators Association is working to issue model rules that include making it a legal violation to use an "expert" designation to mislead investors, Borg said.
William F. Galvin, Massachusetts secretary of the commonwealth, prodded officials in his state this year to adopt a model code for advisers who want to hold themselves out as elder experts. He acted after being alerted to picnics and even a "senior prom" where older people are entertained and befriended, and later hit up for money.
"They have no interest in providing independent advice to older investors," Galvin said in an interview. "They're preying on older peoples' isolation to some extent."
Leo Stulen, 79, a retired salesman and school bus driver in Minnesota, invested his nest egg in a deferred annuity with Allianz, shifting more than $40,000 out of mutual fund accounts after welcoming a salesman into his home.
Stulen, who works part time as a bank courier, said in a telephone interview that he was not told that his money would be locked up for 15 years. Shortly after Stulen made the investment, his wife broke her hip, and the couple began to have trouble meeting mortgage payments and mounting health-care bills. He took early withdrawal of his money, incurring a $6,000 "surrender" penalty.
"They sold a guy who had one foot in the grave and another on a banana peel an investment" that was locked up for 15 years, said Stulen, who has had several heart attacks.
The chief executive of Allianz's life insurance unit defended his company's practices and said less than one-half of 1 percent of investments lead to a complaint. In an interview yesterday, the executive, Gary Bhojwani, said that Allianz had imposed extra layers of oversight, including writing forms free of financial jargon, to ensure that salesmen are directing the elderly to suitable investments.
"To me, the real crux of the issue is: Insurance companies and agents are putting their own profit motives ahead of the needs of our senior citizens," said Lori Swanson, the Minnesota attorney general, who sued over the issue.
