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Chicago will become the first city to report financial activity and fraud to the Consumer Financial Protection Bureau, but Director Richard Cordray is hoping other municipalities will follow suit.
December 5 -
Dodd-Frank-required study finds borrowers are younger and seniors are increasingly taking out bigger loans.
June 28 -
The Consumer Financial Protection Bureau is adding to its efforts to protect vulnerable groups of consumers with a new study into elder financial abuse.
June 15
WASHINGTON — Financial advisors are using too many different senior certifications to lure older consumers into business, according to a report issued Thursday by the Consumer Financial Protection Bureau.
There are more than 50 different so-called "senior designations" that financial advisors can use to claim that they specialize in working with seniors, the report said. The extensive list of titles can create confusion with consumers in determining how much experience the advisor has and whether the title is being improperly used to dupe seniors into doing business with them.
"Many seniors have routines, and their predictable patterns can make them easier targets for predators," said CFPB Director Richard Cordray during a conference call Thursday. "With such a bewildering array of titles and acronyms, it is no wonder that seniors are often confused and misled by these titles."
The report says the designations have become too complex and confusing since each requires a different level of training, certification, education or exams.
"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," Cordray said. "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."
Each designation can also be subject to a different federal and state regulatory regime.
In response, the CFPB advises policymakers and the Securities and Exchange Commission to improve the designations by: creating "tools" to make it clearer for consumers; set "minimum" standards for receiving a designation; and increase enforcement against misuse of the designations. The CFPB was required by law to perform this report.
"We believe adoption of these recommendations will help older consumers avoid financial advisers who would misuse their designations to sell inappropriate investment and financial products," said Hubert Humphrey, the CFPB's assistant director for the Office of Older Americans, during the call.
CFPB staff declined to say how often the designations are improperly used but added that there are tens of thousands of financial advisors using them. One particular problem that the report noted is when such designated advisors reel in seniors through "free lunch seminars" that are really staged sales events for wide-ranging investments, including insurance products. In such cases, advisors used titles like "Certified Senior Adviser" or "Chartered Retirement Planning Counselor" when such a regulatory qualification does not exist.
"When it comes to senior financial advisers, these specialty titles are anything but transparent. In fact, we found that many consumers don't always understand the differences between different types of financial professionals, like brokers and investment advisers, let alone the 50 plus senior designations that many of those financial advisers add to their titles," Humphrey said. "One of the main objectives of our work is to ensure that markets for consumer financial products and services are fair and transparent."
"We now have 50 million older Americans in this country; and with the aging of the baby boomers, that number is expected to grow to 70 million by 2030."
