PA 17-120—sHB 6992

Aging Committee

Banking Committee

AN ACT PROTECTING THE INTERESTS OF CONSUMERS DOING BUSINESS WITH FINANCIAL PLANNERS

SUMMARY: This act makes various changes affecting financial planners. It:

1. establishes advertising and disclosure requirements for financial planners not otherwise regulated by state or federal law;

2. prohibits these financial planners from expressing or implying special training, education, or experience serving senior citizens unless they meet certain education requirements;

3. requires these financial planners to disclose to consumers, upon request, whether they have a fiduciary duty with regard to each recommendation they make; and

4. requires the departments of banking (DOB) and consumer protection (DCP) to post on their respective websites links to certain information regarding financial planning professionals and consumers' rights.

EFFECTIVE DATE: Upon passage

ADVERTISING REQUIREMENTS

The act prohibits financial planners from using, in connection with an agreement to provide financial planning or investment advice for compensation, a certificate, professional designation, or advertisement expressing or implying special training, education, or experience in advising or serving senior citizens without meeting certain education requirements (see BACKGROUND). State law already prohibits individuals involved in securities transactions from doing this.

Under the act, a “financial planner” is a person offering individualized financial planning or investment advice to a consumer for compensation who is not otherwise regulated by state or federal law.

DOB AND DCP WEBSITES

The act requires the banking commissioner, to the extent practicable, to post on the department's website links to educational materials on (1) financial planning and other designations, including associated prerequisites, and (2) requirements for investment advisers under the Connecticut Uniform Securities Act.

The commissioner must also include on the website, information about a consumer's right to ask financial planners or other financial planning professionals to disclose fees and compensation as required by state and federal law.

The act requires the banking department to share the information it posts on its website with DCP, which must then post the information on its website.

BACKGROUND

Educational Requirements for Individuals Advertising Experience with Senior Citizens

The law prohibits individuals offering, selling, or purchasing securities, in connection with an agreement to provide financial planning or investment advice for compensation, from using a certificate, professional designation, or form of advertising expressing or implying special training, education, or experience in advising or serving senior citizens unless the individual has completed a course of study that:

1. resulted in an academic degree from an accredited higher education institution in a field related to advising or serving senior citizens, as determined by the banking commissioner or

2. relates to advising or serving senior citizens, as determined by the commissioner, and is provided by an organization accredited by the American National Standards Institute, National Commission for Certifying Agencies, an organization recognized as an accrediting agency by the U.S. Department of Education, or another organization approved by the commissioner (CGS 36b-4(c)).

Related State Laws

Existing law regulates the conduct of many financial advisors. For example, the Connecticut Uniform Securities Act (CGS 36b-2 et seq.) generally prohibits, in connection with the offer, sale, or purchase of a security, individuals from (1) engaging in fraud or deceit, (2) making untrue or misleading statements, or (3) engaging in a dishonest or unethical practice. It also requires “investment advisors” to disclose certain compensation and fee information. Investment advisors advise others on securities transactions for compensation and as part of a regular business.

Additionally, Insurance Department regulations prohibit insurance producers (i.e., agents) from using senior citizen-specific certifications or professional designations to mislead a purchaser when (1) soliciting, selling, or purchasing life insurance or annuities; (2) providing advice about purchasing or selling life insurance or annuities; or (3) issuing reports or analyses on life insurance or annuities (Conn. Agencies Reg., 38a-432b-2).