Due to pervasive financial abuse of America's senior citizens, the Certified Financial Planner Board of Standards is urging the adoption of a set of standards for financial planning designations.
A set of standards ranking the many designations used by those who claim to be financial advisors would help all Americans, and especially seniors, determine which designations mean a planner has proper training and which designations are meaningless or meant to deceive, says the CFP Board.
The board asked the Consumer Financial Protection Bureau to develop such a rating system in a letter delivered Tuesday.
In conjunction with the letter, the board released its 2012 Senior Americans Financial Exploitation Survey that revealed more than half of the 2,600 CFPs surveyed (56%) had worked with a senior who had been subject to unfair, deceptive or abusive practices by a financial advisor or someone selling financial products. Another 32% knew someone personally who was not a client who had been subject to such practices.
"Older Americans have already given many years of hard work and dedication -- raising families, serving in the military, building businesses -- all to become one of our most financially secure generations," says CFP Board CEO Kevin Keller. "This survey reveals the pervasive financial abuse victimizing America's seniors."
The board "urges the bureau to take prompt action to reduce the use of misleading certifications and designations and to work with other federal and state regulators on legislative and regulatory policies to protect older Americans," Keller adds.
There are currently more than 140 designations used by financial advisors with no consistent state or federal definitions or education standards.
"Americans, especially seniors, are left on their own to sort through the alphabet soup of letters at the end of a financial professional's name," the board said.
The CFP Board asked the bureau to rate designations from those that represent legitimate educational standards to those that are meaningless.
The CFP designation represents high standards of practice and continued education for those who earn the designation, the board says.
In addition to the large number of advisors who know of abuse victims, the survey estimates only 5% of victims actually report financial abuse when advised to do so.
Half of those surveyed knew of older investors who had been offered high-yielding investments described as "no risk" or "low risk." Another 34% were aware of older investors who have been pitched prize-winning scams, and 20% were aware of older investors who have been subject to power-of-attorney or guardian abuse.
The majority also knew of investors who have been presented with incomplete financial information or who had been offered unsuitable financial products.