The head of the U.S. Securities and Exchange Commission says the federal government will have to do something to protect old consumers from financial professionals with confusing or misleading credentials.

One problem is the “cacophony” of designations that individuals selling retirement planning products and services use to identify themselves as senior issues experts, SEC Chairman Christopher Cox testified Wednesday at a hearing of the Senate Committee on Aging.

“There’s a lot of alphabet soup,” Cox said.

During an upcoming “seniors summit,” the SEC and other summit sponsors will talk about the role the federal government should play in resolving concerns about designations, Cox said.

Committee On Aging members called the hearing in response to media reports of advisors with confusing credentials persuading seniors to buy annuities that clearly were unsuitable for their needs.

Sen. Gordon Smith, R-Ore., the most senior Republican on the committee, said he had a bright staff member go through the process for getting one of the designations.

After preparing for about an hour, the staffer passed the “3 hour” designation program exam in about 90 minutes, Smith said.

The staffer “was able to obtain a passing score of 82%,” but she is certainly not qualified to advise seniors on investing for retirement, Smith said.

Sen. Claire McCaskill, D-Mo., suggested that the government should create a “simple warning” to tell seniors to “beware of designations.”

Gary Bhojwani, president of Allianz Life Insurance of North America, Golden Valley, Minn., told the committee that Allianz Life requires agents to explain its products fully to consumers, and to obtain a signed statement indicating that the consumer understands the products they are buying.

Allianz Life keeps a staff of licensed insurance agents on call to answer questions, and it has a system to flag potentially unsuitable sales for further review, Bhojwani said.

In addition, Allianz Life will be calling all purchasers of annuities who are older than 75 to make sure that they know what they bought, and it will be establishing a list of professional designations that agents can use in marketing materials, Bhojwani said.

Edwin Pittock, president of the Society of Certified Senior Advisors, Denver, said the CSA designation was intended as a supplement to other credentials and that CSA holders should not be marketing themselves as experts based on that designation.

“The CSA designation alone does not represent expertise,” but, rather, shows that the advisor has “gone the extra mile” to learn about aging and senior issues, Pittock said.

Pittock testified that CSA designees are required to notify the association if they are the subject of any disciplinary actions or investigations, and that the society monitors state insurance department Web sites to ensure that none of its members are disciplined by the states.

If a designee is found to have engaged in unprofessional conduct, the designee may be suspended from the society or be stripped of the designation entirely, Pittock said.

Pittock reported that his group has taken the CSA designation from 37 of 12,000 CSA holders over the past 5 years.

“That’s almost zero,” said Sen. Herbert Kohl, D-Wis., chairman of the Senate Committee on Aging.

Minnesota Attorney General Lori Swanson and William Galvin, Massachusetts secretary of the commonwealth, said insurers should bear more responsibility for advisor quality and annuity sales practices.

“I think it’s important that they be held accountable,” Swanson said.

If lawmakers “do not go up the food chain, then you aren’t solving the problem,” Galvin said.

Sandy Praeger, the Kansas insurance commissioner and incoming president of the National Association of Insurance Commissioners, Kansas City, Mo., recommended that Congress look at the agents, not the annuities.

“The problem is the aggressive way the agent sells these products,” Praeger said. “The focus should be on the consumer and the agent’s interaction.”

Financial services groups that weighed in on advisor training and credentials before the hearing included the National Association for Fixed Annuities, Milwaukee; the National Association of Insurance and Financial Advisors, Falls Church, Va.; and the American Council of Life Insurers, Washington.

NAFA “fully supports any activity that protects individuals from purchasing products that do not help fulfill their financial and retirement objectives,” and it also opposes any unethical sales practices, NAFA Executive Director Kim O’Brien writes in a memo addressed to Kohl.

“As the committee is aware, there are many designations and certifications available to anyone who sells registered security products and regulated insurance products,” O’Brien writes. “NAFA highly recommends continuous and rigorous education and training for everyone selling these products. One simply cannot be too educated or trained.”

NAIFA members “believe that the possession or use of a particular professional designation or certification by an advisor should not, in and of itself, create a presumption about the qualifications or ethics of the advisor,” NAIFA says in its statement about advisor credentials.

“Some [designation programs] require advisors to undertake years of rigorous classroom and independent study, and pass a comprehensive examination,” NAIFA says. “Others require less study. Thus, different designations and certifications can mean different levels of expertise and different areas of knowledge.”

NAIFA notes that state licensing and continuing education requirements also play a role in increasing the likelihood that consumers will get good advice from qualified advisors.

NAIFA supports adoption of the Suitability in Annuity Transactions Model Regulation and the Annuity Disclosure Model Regulation models developed by the National Association of Insurance Commissioners, Kansas City, Mo., NAIFA says.

“In addition, NAIFA believes that full and easy to understand disclosure of all the pertinent facts about insurance and financial products is in the public’s best interest,” NAIFA says.

NAIFA and the ACLI took pains to defend the value of annuities.

“It is not the products that are abusive,” NAIFA says. “Rather, it is the use or misuse to which they are sometimes put.”

Annuities are bound to play an increasingly important role in the finances of the 77 million baby boomers, ACLI President Frank Keating writes in a letter to Kohl.

“Many baby boomers are using annuities today to supplement their savings for future income needs, while other will use annuities to secure a steady retirement income,” Keating writes.