The Consumer Financial Protection Bureau (CFPB) today issued a report aimed at taking steps to reduce the confusion around the growing number of financial industry “senior designations” targeting older consumers.
The CFPB’s report, Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risk, was part of the mandate given to it by the Dodd-Frank Act to make recommendations to Congress and the Securities and Exchange Commission about how to help older Americans sift through and evaluate the plethora of senior designation titles used by financial advisors to market their services.
The report identified more than 50 such designations, ranging from Accredited Estate Planner (AEP) to Retirement Plans Associate (RPA). According to the CFPB, a large number of these designations aren’t accredited and/or don’t have any online methods to check a designee’s status or to submit complaints. In addition, many of them don’t have Web site disclosures about disciplinary procedures for a designee’s misconduct.
In the report’s preamble, CFPB director Richard Cordray said these designations imply that certificants have special training and experience in giving financial advice to seniors.
“If well grounded, they can provide a sound basis for recommending financial products to help consumers prepare for and maintain a secure retirement,” Cordray wrote. “In preparing the enclosed report, however, the Office for Older Americans [a division within the CFPB] heard frequently from industry representatives, state and federal regulators, and consumer organizations that older consumers may be confused or misled by financial advisers touting senior designations.”
The CFPB’s report to Congress and the SEC makes a series of recommendations to help simplify this confusing marketplace:
• Establishing a centralized tool enabling senior investors to verify a financial advisor’s designations.
• Requiring financial professionals who utilize a senior designation to provide a disclosure to clients and prospective clients.
• Providing minimum standards for acquiring senior designations and the amount of training necessary to earn the designation, including requiring standardized testing and specific number of units of education to improve the consistency and quality of designations.
• Prohibiting the use of senior designations issued by any non-accredited conferring organization.