Marketing firms targeting elderly draw attention from regulators

NEW YORK — Regulators are turning the spotlight on companies that specialize in using high-pressure marketing tactics to sell financial products and services to older Americans. Some firms provide financial advisers with detailed scripts, and other marketing material, designed to intimidate — or even deceive — the elderly into buying annuities and other financial products. Others arm advisers with ghostwritten books that serve to position those advisers falsely as experts in financial planning for this demographic. “When these people stand up in front of senior groups and hold up a book with their picture on it and say they wrote it, they are deliberately trying to mislead people into believing they are an expert and wrote a book,” said Jim Nelson, assistant secretary of state for business regulations and enforcement in Mississippi. After filing charges against two annuity salesmen earlier this month, regulators in Massachusetts proposed the nation’s first set of regulations requiring advisers who claim expertise or certification in financial issues affecting older Americans to prove they have the special training to that effect. In making its case for the need for the proposed regulations, the state highlighted the activities of several companies, including Brokers’ Choice of America Inc. in Centennial, Colo., Piece of Pie Strategic Coaching Inc. in Rochester, Minn., and Javelin Marketing Inc. in Concord, Calif. While the regulator did not charge the companies with any wrongdoing, it did hold them out as examples of companies that employed “sophisticated marketing techniques … designed to scare and manipulate seniors into purchasing annuities.” ‘Troubling’ tactics Meanwhile, the Institute of Elder Planning Studies was cited by Mr. Nelson, who also heads the Washington-based North American Securities Administrators Association Inc.’s special committee on senior designations, for employing “troubling” marketing tactics aimed at older Americans. The Glendale, Colo.-based institute was founded by Tyrone Clark, who is also president and owner of Brokers’ Choice of America. For a fee of approximately $2,500, according to Mr. Nelson, the institute would supply advisers with a ghostwritten book on senior financial planning. The book, entitled “Alligator Proofing Your Estate: Protect Your Life Savings From Probate, Nursing Homes and Taxes” listed the adviser as its author. It even featured a picture of the adviser on its cover, according to Mr. Nelson. A phone call to a telephone number listed in the book was answered by Jeff Hoyle, director of public relations for Sundance Public Relations, which Mr. Hoyle described as a subsidiary company of Brokers’ Choice of America. The book was still available to a “select few,” Mr. Hoyle said. However, he declined to discuss the book or how much it cost, citing an “internal policy” against offering that information. Mr. Hoyle also declined to comment on Mr. Nelson’s characterization that advisers use the book to mislead people. “I can’t speak to that,” he said. The Institute of Elder Planning Studies is no longer in business, and the certified elder planning specialist designation that it promoted has been discontinued, according to Mr. Hoyle. There is no current telephone listing for the Institute of Elder Planning Studies in Glendale or elsewhere in the Denver area. Such operations are “like cockroaches,” Mr. Nelson said of the Institute of Elder Planning Studies. “When you shine some light on these things, they run away … they shut down as that one and open up a week later as another one.” According to its website, Brokers’ Choice of America is an “insurance marketing organization” that “over the years has been responsible for more than $4 billion in annuity and life insurance sales.” In September 2002, the Massachusetts Securities Division filed a complaint against Mr. Clark, alleging that he and Brokers’ Choice “recruited and trained associates specifically to target the elderly and to scare them into selling their securities holdings for the purpose of purchasing annuities with exorbitant commissions.” The complaint also said Mr. Clark, Brokers’ Choice of America and another company he headed at the time “used specious titles such as certified elder planning specialists to mislead the elderly and disguise the fact that the associates were insurance salesmen.” The complaint was settled by consent order in December 2002. This month, Massachusetts regulators charged John Christopher Huck, an insurance salesman in Princeton, Mass., with “dishonest and unethical sales practices … [and] abuses against elderly Massachusetts residents.” In that complaint, Brokers’ Choice of America was cited as providing Mr. Huck with materials used to promote a Senior Financial Survival Workshop seminar in 2005. While an advertisement for the seminar stated that “nothing is ever sold at the workshop,” the complaint against Mr. Huck charges that selling annuities and other forms of insurance was in fact “the ultimate goal of the seminar.” Mr. Huck took a training course from Brokers’ Choice “several years ago,” said Steve Marsh, a spokesman for the company. “We are very interested in finding out what marketing material he is using.” The material cited in Mr. Huck’s complaint is “ancient history,” according to Mr. Marsh. Brokers’ Choice’s marketing material, he said, is “continuously updated by legal compliance. BCA considers itself to be on the cutting edge of legal compliance in this industry.” In a separate action earlier this month, Massachusetts also charged Michael Mark DelMonico, an insurance salesman based in Lynnfield, Mass., with taking advantage of “sophisticated marketing tools geared towards senior citizens to hold himself out as an objective, knowledgeable and unbiased adviser to seniors, with the undisclosed agenda of convincing them to sell their assets in order to buy unsuitable, high-commission annuities.” Those tools were supplied in part by Piece of Pie Strategic Coaching, according to the complaint. The complaint characterizes Piece of Pie Strategic Coaching as a “sophisticated marketing platform geared towards selling annuities and other products to the senior marketplace,” using free lunches or dinners and scripted meetings with potential clients, aimed at discrediting the client’s current financial adviser, as well as banks and traditional equity securities. Mr. DelMonico, according to the complaint, also gave older prospects “Sins of Omission, Things Your Broker Should be Telling You” by Piece of Pie founder Michael Kaselnak. However, the complaint noted that the biography of Mr. Kaselnak in the book fails to include his 30-day suspension by Washington-based NASD in 2001, the suspension of his securities license for 30 days by the state of Minnesota during the same time period or the letter of admonition he received in 2001 from the Denver-based Certified Financial Planner Board of Standards Inc. He declined to be interviewed. Javelin Marketing, while not charged with any wrongdoing, has also caught the attention of regulators. According to the complaint filed by Massachusetts against Mr. Huck, the salesman circulated a newsletter provided by Javelin called SeniorFinances with his picture and name on the first page, “to give the impression that Huck has written the newsletter.” Javelin also provides, for a fee, ghostwritten books to advisers that they can present with their name and picture on the cover. Titles include “Asset Protection & Wealth Preservation: A Guide to Help You Avoid Common & Costly Financial Mistakes — Defeating the Forces That May Take Your Money” and “Mistakes Retirees Make With Their Finances” that can, according to Javelin’s website, be “personalized” with an adviser’s name and picture on the cover. Included on the website is a list of “16 ways to use your book to generate more business.” Javelin also offers booklets advisers can buy “customized with your picture and information,” including “Annuity Ownership Opportunities.” The booklets, the sales material explains, can be used at seminars, given to clients and used “to get speaking engagements ... get interviewed in the newspaper [and] get a radio or TV show.” Javelin also touts “seminar marketing systems” such as Six Mistakes Retirees Make and an annuity seminar system targeted to “affluent seniors.” Attempts to reach Javelin executives were unsuccessful. In response to a request to speak with a company executive, a Javelin employee said, “We don’t want to be part of your report.”