Friday, February 10, 2012

It is Tough to Compete Against Unethical Advisors

I do not mind competition, but when the competition is flaunting the laws of Florida, then I have a problem with them. I always like to look up the background of people who use the term "Financial Planner" on their web site. Especially, when I know that they are an insurance agent.

Here is a news flash. An insurance agent, who is not securities licensed with a broker-dealer or who is not licensed with a registered investment adviser, cannot advise people to sell their investments and buy annuities.

In addition, insurance agents cannot hold themselves out to the public as a "Financial Planner" unless they are registered with a registered investment adviser firm. There are some exemptions to this rule, but trust me, insurance agents cannot promote themselves as a "Financial Planner" without being affliated with a registered investment adviser.

There is an insurance agent that I heard about that is working with seniors no less, who gives advice on qualifying for Veteran's Aid & Attendance Benefits and Medicaid. He has no securities licenses, thus he cannot advise clients to sell any securities whatsoever. Plus, he is not an attorney.

In a nutshell, his advice is to sell all your investments out of the senior's name and transfer the money to their adult children. Once it is transferred to their adult children, then he will sell them annuities. By doing this, he claims to have helped them qualify for government benefits. There are so many pitfalls to this advice that I would love to go into more detail about, but for purposes of this blog, let us stick to the unethical nature of the advice.

Not only is this insurance agent flaunting the securities laws of the State of Florida, they are also putting themselves on a slippery slope as it pertains to the Unauthorized Practice of Law. Recommending clients to implement asset transfers to qualify for government benefits without the advice of an Elder Care Attorney is tantamount to Unauthorized Practice of Law in my mind.

This particular insurance agent also mentions on their web site that their career started as a CPA. The implication of course is that this insurance agent is also a CPA. A quick license check on the Florida Department of Business & Professional Regulation web site shows no record as a CPA.

Not only is this insurance agent violating securities laws advising clients to sell their securities to buy his annuities. In addition, he is holding himself out as a Financial Planner which is also a securities violation. Further, he is dancing around the Unauthorized Practice of Law issue with his questionable advice that happens to be the same for everyone he meets. Last but not least, he is implying that he is a CPA when he is not. Yet, people still do business with unethical advisors like this insurance agent.

If you do business with anyone in the financial services business, including myself, you need to know their background. More importantly, you should know whether the advice that they are dispensing is ethical and legal.

Be careful out there.