In its oversight of financial markets that cater specifically to seniors, the Consumer Financial Protection Bureau is taking issue with professional designations used by those in the business—whether that be in managing finances or working for senior housing solutions for those in need.
Drawing attention to the widespread use of designations such as Certified Senior Advisor (CSA) and Certified Specialist in Retirement as well as estate planners, financial advisors and insurance agents with special designations, the CFPB says it is launching an effort to change the current system.
In a report released to Congress today the agency found the market is confusing, risky, and can be misleading for consumers.
The Consumer Financial Protection Bureau is working with federal and state regulators to monitor and enforce improvement across professional markets that use special designations to show they are qualified to work with senior buyers.
“We found that these so-called advisers may use any of more than fifty different senior designations to promote their services to older Americans,” said CFPB Director Richard Cordray in a call with members of the press. “With such a bewildering array of titles and acronyms, it is no wonder that older Americans are often confused and misled by these titles.”
The CFPB estimates there are tens of thousands of professionals with one or more of the roughly 50 designations, including those who work with retirees on financial planning, retirement income plans, estate planning, insurance and other such services.
Part of the problem, the agency says, is there’s no way for consumers to distinguish between the designations and whether they are accredited. While some require several hours of continuing education, others require entire degree programs and years of university study.
“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 an esteemed university,” Cordray said. “Our research found that the training and standards required to attain these credentials varies enormously.”
The CFPB is working with Congress, the SEC and FINRA on recommendations to make the market more transparent for senior consumers. Because retired people have little opportunity to recover from a poor financial decision later in life, CFPB staff said, the initiative is increasingly important.
Citing more than 400,000 U.S. insurance agents according to the Bureau of Labor Statistics and more than 200,000 financial advisors, CFPB staffers said the problem is getting worse.
“There are literally hundreds of thousands of people engaged in this. Many do use senior certifications,” one member of CFPB staff said.
With approximately $18 trillion at stake—the 2009 estimated net worth of the U.S.’s 65+ households—and the growing number of older adults, adding protections is becoming increasingly important. Although people aged 60 and older currently make up just 15% of the population, they are estimated to account for at least 30% of investment fraud victims, the CFPB report said.
Toward the lack of supervision and enforcement around senior designations, the CFPB has made several recommendations to Congress toward streamlining the process and reducing confusion around the issue including implementation of training standards to obtain the designations, setting standards of contact for those who old them and increasing supervisions and enforcement. The enforcement will span both the federal and state levels, the CFPB says.
“Seniors may assume that a financial adviser has their best interest at heart, when that is not necessarily the case,” Cordray said. “If they fall prey to a scam, they may be too embarrassed or too frail to pursue legal action.”
Written by Elizabeth Ecker