Report Finds Financial Advisors Using Over 50
Titles to Suggest Expertise in Senior Citizen Matters
Consumer Financial Protection Bureau's Office for
Older Americans calls for
action by regulators to assist senior citizens who are ‘often confused
"With such a bewildering array of titles and acronyms, it is no
wonder that older Americans are confused and misled"
April 24, 2013 – A report highlighting the
well-known problem of so-called “senior designation” credentials of
questionable value used by many financial advisers to market their
services to older Americans was released last week. It also calls for
specific action by federal and state regulators to protect seniors.
The Consumer Financial Protection Bureau (CFPB)
study finds more than 50 different senior designations used by advisers
to indicate that they have advanced training or expertise in the
financial needs of senior citizen consumers.
“With such a bewildering array of titles and
acronyms, it is no wonder that older Americans are confused and misled
by these titles,” said CFPB Director Richard Cordray.
“Today’s report underscores the need for consistent
high-level standards of training and conduct for those advisers who want
to acquire a bona Tfide senior designation.”
The report highlights the challenges that the
nation’s 50 million seniors face in navigating the complex world of
financial advice and services. Older consumers have unique
vulnerabilities, and are often the targets of fraud.
The Dodd-Frank Wall Street Reform and Consumer
Protection Act directed the CFPB’s Office of Financial Protection for
Older Americans (Office for Older Americans) to make recommendations to
help older consumers identify the most appropriate financial adviser and
verify a financial adviser’s credentials.
The report, entitled “Senior Designations for
Financial Advisers: Reducing Consumer Confusion and Risks,” includes
recommendations to Congress and the U.S. Securities and Exchange
Commission. Because many financial advisers holding senior designations
are regulated by state securities and insurance regulators, the Bureau
offers recommendations for their consideration as well.
The report found that:
● The names and acronyms of senior
designations confuse consumers. Titles and acronyms for the numerous
designations can appear quite similar, and consumers have no simple,
clear means to distinguish among these designations. Similar sounding
designations can have very different requirements for earning the
● There is a wide variety of required
training, qualifying exams, and oversight associated with different
designations. Some senior designations may require rigorous
college-level coursework while others may be acquired by attending a
● There is a lack of comprehensive
supervision and enforcement. No single authority is responsible for
ensuring that those who use senior designations do not mislead or harm
Older consumers can be attractive targets for the
marketing of various financial products. They often have higher
household wealth in the form of retirement savings, inheritance,
accumulated home equity, or other assets. They are also more likely to
experience cognitive decline, which can impair their capacity to manage
For example, a particular problem associated with
senior designations is the participation of some designees in “free
lunch seminars.” These events are often marketed as educational
seminars, when in fact they are staged sales events to sell investment
and other financial products.
A study conducted by the Financial Industry
Regulatory Authority showed that older consumers are more likely to rely
on the advice of a professional who uses a senior designation. With more
than 50 designations, consumers risk paying for an adviser they believe
has a breadth of experience, but who, in reality, simply paid a website
for multiple designations.
Today’s report was informed by a Request for
Information on senior financial exploitation that the Bureau issued in
June 2012. The Bureau conducted extensive outreach to outside
stakeholders, and, in addition, held roundtable listening sessions on
the topic of senior designations in late 2012. The report was informed
by financial planners, insurance and securities professionals, consumer
advocates, social workers, and other industry stakeholders.
Based on its findings, the Bureau’s recommendations
● Implementing rigorous training standards
to obtain senior designations: The Bureau recommends that state and
federal regulators implement rigorous criteria for acquiring senior
designations, including specific standards for education, training, and
● Setting strict standards of conduct for
those using senior designations: The Bureau recommends that state
and federal regulators set consistent and strict standards of conduct
for those using senior designations. Such standards could include
prohibiting senior designees from characterizing sales events as
educational seminars, and selling financial products and services at
events that are advertised or described as educational or informational
● Increasing supervision and enforcement:
The Bureau recommends that federal and state regulators consider
increasing existing supervision of and enforcement authority against
misleading conduct by a holder of a senior designation.
The Bureau believes that adoption of these
recommendations will help older consumers avoid financial advisers who
would misuse their designations to sell inappropriate investment and
The Bureau’s Office for Older Americans conducts
research and educational efforts in order to provide seniors the
information they need to make safe and responsible financial decisions.
Following the report’s release, the Office for Older Americans will work
with federal and state regulators and offer assistance in developing a
tool to help consumers verify the credentials of financial advisers who
market their services and products to older adults.
The Consumer Financial Protection Bureau helps
consumer finance markets work by making rules more effective, by
consistently and fairly enforcing those rules, and by empowering
consumers to take more control over their economic lives. For more
Director of Consumer Financial Protection Bureau
Briefs Press on Report
April 24, 2013 - Older Americans are in many cases
the specific targets of unfair, deceptive and abusive financial
practices, according to Richard Cordray, Director of the Consumer
Financial Protection Bureau. He spoke to the media following the release
of a report on April 18 highlighting problems with so-called “senior
designation” credentials that many financial advisers use to market
their services to older Americans.
Cordray noted, “The law requires us to have an
office that focuses on serving older Americans, and that office
currently is headed by my esteemed colleague, Skip Humphrey. Skip and
his team have a singular focus on improving the financial lives of our
growing numbers of seniors.”
Following are highlights of his remarks.
The law requires us to have an office that focuses
on serving older Americans, and that office currently is headed by my
esteemed colleague, Skip Humphrey. Skip and his team have a singular
focus on improving the financial lives of our growing numbers of
As the past few years have revealed all too
clearly, financial products have the potential to wreak havoc on every
individual consumer and on the broader American economy. Older Americans
are no exception, and in many cases they are the specific targets of
unfair, deceptive and abusive financial practices.
In my time as Attorney General of Ohio, I saw too
many heartbreaking situations where older Americans had lost their
entire life savings to a scam or a fraudulent sweepstakes offer. I
recall a four-inch stack of mail that one man brought me, which his
elderly mother had received just in the past month after she had signed
up for one of the phony sweepstakes offerings.
Many seniors have routines, and their predictable
patterns can make them easier targets for predators. They can be lonely
or overly trusting, and we now have many ways for perfect strangers to
communicate with them, often taking advantage of their trust. We have
seen this quite plainly with so-called “senior financial advisers.”
Congress directed the Bureau to make
recommendations that will help older consumers identify and verify a
financial adviser’s credentials or “senior designations,” which can
include any degree, title, certificate, or accreditation that implies a
financial adviser has some kind of senior-specific expertise or
We found that these so-called advisers may use any
of more than fifty different senior designations to promote their
services to older Americans. With such a bewildering array of titles and
acronyms, it is no wonder that seniors are often confused and misled by
The designations can be earned from places as
varied as a three-hour online course offered by a for-profit company to
a two-year graduate degree from a reputable university. Our research
found that the training and standards required to attain these
credentials varies enormously.
A senior choosing between an Accredited Retirement
Advisor and an Accredited Estate Planner will likely do so without
knowing which one is required to have five years of experience and some
graduate level education and which is not – and hence to know who is
better equipped to advise them on financial matters.
Because many different types of professionals, like
stock brokers or insurance agents, use these senior designations, there
are multiple federal and state regulators that may oversee them. Some
may fall through the cracks of a complex marketplace.
Consumer protection concerns in this arena have
increased as more consumers turn to professionals for retirement
guidance and advice. At the Consumer Bureau, we have requested public
comments and held roundtables in order to better understand people’s
experiences. We heard about the challenges people face in verifying the
legitimacy of an adviser’s credentials, given the lack of consistent
standards in achieving and maintaining these credentials.
A striking takeaway from these roundtables was the
vulnerability of many older Americans. Seniors may assume that a
financial adviser has their best interest at heart, when that is not
necessarily the case. If they fall prey to a scam, they may be too
embarrassed or too frail to pursue legal action.
We need to educate and inform not only older
Americans but also the caregiver generation – people like me with an
elderly parent. My father is 95. He grew up during the Great Depression
and he has always been remarkably self-sufficient. He should not have to
fend off unscrupulous advisers who are trying to raid the life savings
of seniors. Those in our generation need to take time to learn about
these financial products and services so we can help ensure that our
parents and other older Americans are able to make the best financial
decisions for themselves.
Today’s report illuminates the challenges that
older consumers face in trying to navigate the complex world of
financial advice for seniors. The report also highlights the need for
consistent high-level standards of training and conduct for those
advisers who want to acquire a bona fide senior designation. I want to
thank both the SEC and FINRA for all of their collaboration with us in
preparing this report.
The Consumer Financial Protection Bureau is
dedicated to working in every way we can to improve the financial lives
of America’s seniors – a generation that has earned the right to all the
protection we can reasonably afford them. We have come to refer to them
as the “Greatest Generation” because they have given so much to our
nation. Now it is our job to make our best efforts to protect them, as
they so richly deserve.
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