Briefly Noted

    On the Alert: 3 Shaky Marketing Schemes

    The North American Securities Administrators Association (NASAA) has identified three troubling trends endangering the retirement nest eggs of the nation’s growing senior population.

    In testimony before the Senate Special Committee on Aging in a hearing on senior investment fraud,NASAA president Patricia D. Struck said state securities regulators are seeing a proliferation of schemes in three related areas:

    • NASAA members are receiving more complaints from investors who have been enticed into attending seminars sponsored by certain “senior specialists,” commonly through the promise of a free meal. Typically, the specialist recommends liquidating securities positions and using the proceeds to purchase fixed, indexed or variable annuities products the specialist offers.

    • Seniors also continue to be sold variable annuities, which, although a legitimate and suitable investment for some investors, are in many cases unsuitable for seniors because of high surrender charges for early withdrawals, the potential of exposure to market risk, and the steep sales commissions agents often earn when they move investors into this product.

    • The third threat facing seniors comes from unlicensed securities sellers pitching securities that are unregistered. Individuals who sell securities or provide investment advice are required to earn a license by passing rigorous examinations before they can offer their services to the public.

    State securities regulators believe the most effective weapon against fraud is a dual approach: combine aggressive enforcement efforts with financial education to protect investors from unscrupulous individuals.

    To find out more about enforcement efforts and how to avoid fraud, go to NASAA’s Senior Investor Resource Center under Investor Education at the NASAA Web site (

    Source: North American Securities Administrators Association.

    Small-Cap Funds: Too Much Money Hurts

    While investing in funds with extremely low asset levels can be questionable, funds with too much money to manage can have problems that are avoided by more moderately sized funds. Size is particularly important for small-cap equity funds.

    A recent study from the Schwab Center for Investment Research divided the world of small-cap funds based on Morningstar data into five groups based on fund size and expenses. Comparing performance data for each group over 12-month periods between October 1996 and May 2004, the study found the smallest, least expensive funds returned an average of 12%, while the largest, most expensive funds returned only 7.7% on average. For example, if a person had invested $10,000 in the average fund from the best group at the beginning of this time (rebalancing annually), it would have been worth about $23,000 at the end of the period, versus just $14,750 for the average fund in the worst group—a difference of more than $8,000 in less than nine years.

    Source: Schwab Center for Investment Research.

    Help Wanted? How to Find a Geriatric Care Manager

    TFor anyone who has ever lost sleep worrying how their parents are doing half a country away, hiring a geriatric care manager might be a worthwhile consideration.

    Geriatric care managers come from diverse backgrounds in nursing, social work, psychology and finance, and they provide service in all levels of the geriatric care process. Services typically range from $80 to $200 an hour based on their assigned tasks.

    Many geriatric care managers have earned certifications that train and certify them to do various tasks. The National Association of Professional Geriatric Care Managers (NAPGCM), the field’s trade association, recognizes the following: Care Manager Certified (CMC), Certified Case Manager (CCM), Certified Social Work Case Manager (C-SWCM) and Certified Advanced Social Work Case Manager (C-ASWCM).

    If you are evaluating a geriatric care manager, these questions should be asked:

    • What is your professional background and certifications?
    • My relative has the following health conditions—what is your experience in this area, and how would you deal with such a client?
    • Are you available for emergencies? What constitutes an emergency?
    • Does your company provide home care services? Are they licensed?
    • How do you communicate with family members?
    • What are your fees, and how do you prefer payment?
    • What would your visitation schedule be, and what would you do while visiting?
    • Are you qualified to interpret billing statements, and how do you handle payments for expenses that my relative needs?
    • What is your liability coverage? Have you ever been sued?
    • Can you provide references?

    To find a geriatric care manager in a particular geographic area, a good place to start is the Web site of the NAPGCM,

    Source: The Financial Planning Association, the membership organization of financial planners.