WASHINGTON — Older Americans can be confused by dozens of special designations for financial advisors for seniors, and government officials should set strict standards for training and conduct to prevent abuses, according to a new federal report.
The ranks of the elderly are projected grow to 70 million by 2030 from 50 million now, and their savings can be an attractive target for people peddling financial products, the Consumer Financial Protection Bureau said.
The bureau, at the request of Congress, studied how advisors to seniors can promote, or designate, themselves.
The potential for scams increases because there are no set standards for how advisors can designate themselves as experts on the financial matters of senior citizens, and the more than 50 designations they use often have similar sounding names, said the report released Thursday.
Among the names used, the report said, are accredited retirement advisor and accredited estate planner, each of which has, for instance, different educational criteria.
“With such a bewildering array of titles and acronyms, it is no wonder that older Americans are confused and misled by these titles,” said Richard Cordray, the bureau’s director.
“Seniors may assume a financial advisor has their best interest at heart when that is not necessarily the case,” he said. “If they fall prey to a scam, they may be too embarrassed or frail to pursue legal action.”
The bureau noted that the designations used by tens of thousands of senior financial advisors can have dramatically different requirements.
For example, among the qualifications for an accredited estate planner is that a person be a lawyer, accountant, insurance professional, financial planner or trust officer and complete two graduate-level courses.
But an accredited retirement advisor must only pass a 100-question, multiple-choice exam and receive 72 hours of continuing education every three years.
“When it comes to senior financial advisors, these specialty titles are anything but transparent,” said Hubert “Skip” Humphrey III, head of the bureau’s Office of Older Americans.
Oversight of advisors with senior designations is split between the Securities and Exchange Commission and state agencies, such as California’s Department of Insurance.
The consumer bureau recommended that state and federal policymakers establish minimum training and education standards for senior-advisor designations, as well as minimum standards of conduct, such as prohibiting misleading advertising.
Regulators should increase supervision and enforcement of the industry, and the SEC should consider creating a centralized tool to enable consumers to verify a financial advisor’s background, the report said.