In a new survey, the CFP Board revealed just how pervasive the financial abuse of seniors has come to be. At the same time, the board is seeking new standards to help seniors - and all consumers - better understand which self-described financial advisors are truly out to serve their best interests.
"There are 142 designations for financial advisors," says Marilyn Mohrman-Gillis, managing director for public policy and communications at the CFP Board. "We determined that most of them actually have nothing at all behind them other than a weekend course with an open book test and then you get three letters behind your name. They are basically worthless."
To help distinguish the pretenders and sales people from authentic advisors, the board is asking the Consumer Financial Protection Bureau (CFPB) to create a ratings system for financial certifications and designations.
In support of this and other recommendations to stop the financial abuse of seniors, the board also sent the bureau its new Senior Americans Financial Exploitation Survey. The survey found that more than half of the certified financial planners who participated have worked with an older client who has been subject to unfair, deceptive or abusive practices in the delivery of financial advice or the sale of financial products. In all, 2,649 CFPs completed the online survey between July 24 and August 7.
The bureau, through its Office of Older American, is required by Dodd-Frank to submit recommendations to Congress and the SEC about how to address this problem, according to Mohrman-Gillis.
"We look forward to talking with them further about our ideas," she says. "There are so many [designations] out there that it is impossible for seniors or any consumers at all, myself included, to parse them. There is no rating agency that rates these against any standards."
Even if such a rating system existed, Mohrman-Gillis allows, it would only be a partial step toward addressing the complex and pervasive issue of senior financial abuse.
"There are many layers to the problem," she says, "and certainly a variety of solutions [are needed] that range from a rating and education solution to more proactive legislation and regulatory reform."
Ann Marsh writes for Financial Planning.