Financial advisors' use of so-called senior designations came under withering attack Thursday from the Consumer Financial Protection Bureau.
The Bureau described the use of various senior designations as extremely confusing for consumers, noting that more than 50 different such designations are currently used to sell a wide variety of financial and insurance products.
The titles and acronyms for the different designations are often similar or nearly identical to other designations, making it difficult for consumers to distinguish between different designations qualifications or legitimacy, the CFPB said in a new report, Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risks.
The report was issued under a mandate from The Dodd-Frank Consumer Protection Act, which directed the CFPBs Office of Financial Protection to recommend to Congress and the SEC the best ways to improve financial advice offered to senior citizens.
'WIDE RANGE' OF LABELS
The report noted a very wide range in the characteristics and components of the designations. Individuals holding senior designations are subject to different federal and state regulatory regimes, the report stated, adding an additional layer of complexity in comparing these designations.
The group recommended that state and federal regulators develop rigorous training standards and criteria for acquiring such senior designations -- such as qualifying prerequisites, education, training and accreditation.
The report also recommended that regulators set minimum standards for the conduct of senior designation holders, and increase enforcement of existing laws and supervision of senior designees.
Certified Financial Planner Board of Standards, also known as the CFP Board, urged policymakers to swiftly adopt the recommendations in a statement released Thursday.
These recommendations mark an important step toward addressing the proliferation of designations, certifications and titles used to mislead, confuse and deceive Americas seniors, Kevin R. Keller, CFP Boards chief executive, said in a statement. We fully support the bureau in its efforts to shine a light on this significant problem and hope policymakers and regulators will quickly implement these common-sense recommendations to better protect older Americans.
The CFP Board said it particularly supports the creation of a centralized tool for consumers to research and verify senior designations; SEC tracking of complaints related to senior designations, mandatory disclosures by anyone claiming expertise specific to seniors and a requirement that holders of these senior designations meet and maintain minimum levels of professional standards, including education and accreditation, as well as a minimum standard of conduct.
Supervision and related enforcement of designation holders working with seniors should also be increased, the CFP Board said.
A representative of The American College in Bryn Mawr, Pa., which awards both the Retirement Income Certified Professional and the Chartered Advisor for Senior Living designation, said it supported the CFPB's efforts.
"We support the work the CFPB has been doing to raise the standards of quality around professional designations and reduce consumer confusion about what those marks represent," said Keith Hickerson, senior strategy consultant for The American College.
"A well-educated financial advisor is better equipped to meet the needs of seniors than an advisor with less knowledge," Hickerson said. "Regulators and other policymakers should do all they can to encourage advisors to pursue and earn high quality, rigorous credentials for the ultimate benefit of every client they serve."
The American College planned to issue a full statement on the report on Friday, said Eric Gordon, a spokesman for the college.
- 11 Planners Get New Retirement Income Designation
- When Clients Should Start Taking Social Security
- 7 Ways to Help Older Clients With Housing, Health Needs