The CFPB published a report last week that showed financial advisers use more than 50 different “senior designations,” credentials used to market services to older Americans, that can confuse older consumers already at risk for fraud.
“With such a bewildering array of titles and acronyms, it is no wonder that older Americans are confused and misled by these titles,” CFPB Director Richard Cordray said. “Today’s report underscores the need for consistent high-level standards of training and conduct for those advisers who want to acquire a bona fide senior designation.”
Under the Dodd-Frank Act, the CFPB’s Office of Financial Protection for Older Americans is required to make recommendations to help senior consumers identify the most appropriate financial advising and verify their credentials.
Many older consumers are the targets of fraud and identity theft due to their unique vulnerabilities. They often have higher household wealth held in assets and are likely to experience some cognitive deterioration, which can hinder their ability to manage their finances.
A report by the Financial Industry Regulatory Authority found that older consumers are more likely to rely on advice from professionals who use senior designations, but with more than 50 designations, consumers risk paying for services from an adviser they believe is experienced but may not be.
The CFPB report found names and acronyms associated with senior designations can confuse consumers, some senior designations require intense training while others can be acquired by attending a seminar and financial advisers are poorly regulated and overseen by authorities.
The agency recommended that regulators at the federal and state levels implement criteria for acquiring senior designations, establish strict standards of conduct and increase their supervision and enforcement against misleading practices by advisers with senior designations.