The Consumer Financial Protection Bureau told Congress, the Securities and Exchange Commission and state regulators Thursday that the alphabet soup of “senior designations”—more than 50 of them—confuse older Americans and that a three-pronged approach is needed to protect the elderly from fraud.
The CFPB in its report, “Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risks,” recommended lawmakers and regulators take the following three steps to protect older Americans:
- Implement rigorous training standards to obtain senior designations: The bureau recommends that state and federal regulators implement rigorous criteria for acquiring senior designations, including specific standards for education, training and accreditation.
- Set strict standards of conduct for those using senior designations: The bureau recommends that state and federal regulators set consistent and strict standards of conduct for those using senior designations. Such standards could includeprohibiting senior designees from characterizing sales events as educational seminars, and selling financial products and services at events that are advertised or described as educational or informational events.
- Increase supervision and enforcement: The bureau recommends that federal and state regulatorsconsider increasing existing supervision of and enforcement authority against misleading conduct by a holder of a senior designation.
“With such a bewildering array of titles and acronyms, it is no wonder that older Americans are confused and misled by these titles,” said CFPB Director Richard Cordray, in a statement. “Today’s report underscores the need for consistent high-level standards of training and conduct for those advisors who want to acquire a bona fide senior designation.”
SEC spokesman John Nester said that the SEC “appreciates the Dodd-Frank-required report and [we] look forward to reviewing the recommendations as we continue our collective efforts with Congress, fellow regulators and the states to protect our nation’s senior investors.” He added that the SEC has long had a focus on “protecting seniors from financial scams and pursuing those who prey on the elderly,” noting the examination sweeps the agency has conducted in such areas as free lunch sales seminars.
The SEC, Nester said, “regularly reaches out to older Americans through seminars and investor alerts, and maintains an investor hotline for those with questions or complaints.”
The more than 50 different senior designations currently used by advisors are recommending or selling a variety of products, the report said, such as securities, investment opportunities, financial products, and insurance products like annuities and long-term care insurance.