Financial professionals often use certifications on business cards, internet portals, and the like to support their expertise. Whether it is CFP (Certified Financial Planner), CSNA (Certified Special Needs Advisor), or CSP (Certified Succession Planner), the abbreviations suggest a course of study, a test, or a series of tests successfully passed. But is this financial alphabet soup of abbreviations really an indication you have found the right financial professional?
Let’s consider an example. You and your spouse have finally made it to the end of the work week. It’s Friday night, and you’re both tired with only enough energy to take a moment for a personal inventory. You have made it through the financial tsunami. Check. You kept your jobs and the house. Check. You refinanced your home successfully about year ago with Big Bank. Check. You paid your bills timely. Check. Your investments are taking a beating, but surviving. Check. The kids have graduated from college and although struggling to make a living, they are doing well. Check. It is time for a glass of wine and some relaxation.
The phone rings. Caller ID shows the number is from out of state. You answer the phone, and Rick (the names have been changed to protect the guilty) is calling from (it seems) Big Bank, the institution that holds your mortgage and other accounts. Rick is really with Big Bank Securities (although the word “securities” is a bit mumbled). He is calling about your mortgage. You put down the wine and for a brief moment you and your spouse are thinking someone forgot to pay the mortgage. You take a breath and find out that Rick really wants to discuss all that he knows about you and your mortgage. Rick says that he has reviewed your mortgage and you can do so much better. He says not to worry because he can help you refinance at a lower interest rate without any out of pocket costs to you. Rick is your hero.
All Rick needs is a full review of your financial situation in order to assist in the mortgage refinancing. He also suggests that he can provide other financial services and wants to be your personal chief financial officer – he wants to work with you.
Rick does not mention the real purpose behind offering to refinance your mortgage is to gain access to your financial information to sell you products and services. You see, Rick has a CSNA designation behind his name. That gives you comfort. But what is CSNA? It is Certified Special Needs Advisor, and it suggests years of specialized study and grueling testing to earn a designation as someone who can assist with financial arrangements for a child or grandchild with some form of disability. Actually, it is a three day program provided by an organization.
Rick tells you he will call back to get all the information. For a moment you are thinking all is good. Your spouse, however, is not so trusting. Your spouse suggests checking FINRA before any information is provided to Rick. FINRA is the organization in charge of supervising persons in the securities business and enforcing securities laws along with the SEC. You simply go to www.FINRA.org/investors/ToolsCalculator/BrokerCheck/ and follow the directions to type in the name of the person like Rick from Big Bank Securities.
A few minutes later you both stare at the computer screen. You double check and sure enough there is Rick with his education, securities exam results, and a section on complaints. Rick just went through bankruptcy. He has two customer complaints that were settled, one for $5,000 and the other for $50,000. Do you really want Rick to be your personal chief financial officer?
What you really experienced is Wall Street’s desperation to find new opportunities for the sale of products and services even in today’s highly regulated environment. Wall Street and the big banks are farming Main Street for any available pennies, nickels or dimes these days. The perfect entree these days is to entice you with refinancing. Rick’s Big Bank owns or controls a mortgage company. Rick has access to your mortgage information so he knows you must have money because of your big mortgage. He and Big Bank use the mortgage refinancing as a sort of loss leader for enticement. They hide the fees in the refinancing. What Rick and Big Bank Securities want is access to all your financial investments based on the information provided as part of the refinancing. Rick then wants to sell you whatever he can. What’s wrong with all of this?
Your financial data is supposed to be private and protected by the bank and its affiliates. But it is really being used by affiliates to farm for investors. The person calling you is from some other state and not the local branch of the bank. Rick calls himself your chief financial officer, but how can Rick assist you when he has customer complaints and bankruptcy within one year? He cannot maintain his own finances, so why should you trust him with your finances?
Now before we end this discussion, let’s go back to the designation Rick had of CSNA. Just because an agent or broker has alphabet soup behind his or her name does not mean much, all by itself. Many special designations are legitimate and well earned. But some may be acquired through online programs or a three day conference. They may be useful tools in qualifying an advisor, but they are not enough. Check through FINRA anyone who wishes to be your advisor, and think before you invest – Wall Street is actively looking for Main Street customers like you. Make sure that anyone you hire is working in your best interests.