You may have seen Melanie Waddell’s April 18 story on AdvisorOne about the Consumer Financial Protection Bureau’s report detailing its concerns about the myriad “confusing” designations for advisors who work with seniors. Given the Report’s title, “Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risks,” the CFPB is more than a little concerned. Yet its list of remedies is more notable for its omissions than for what it includes—which should be cause for concern by seniors themselves and by professional advisors who serve them.
The Bureau cited more than 50 such designations and listed three major concerns: “The names and acronyms of senior designations confuse consumers; there is a wide variety of required training, qualifying exams and oversight associated with different designations; and there is a lack of comprehensive supervision and enforcement.” It’s hard to take issue with any of these specific complaints. Yet it’s a list that raises way more questions than it answers.
For the moment, let’s set aside the question of why, out of all the challenges facing financial consumers today, the Bureau decided to focus on this one. Seniors certainly are a huge and growing demographic, and I think we can all agree, are all too easily—and often—taken advantage of. So let’s let that pass.
It does seem fair to wonder whether the admittedly confusing keypad of “senior advisor” designations is really the most pressing challenge that senior investors face. Not the ridiculously high fees charged by many 401(k)s, IRAs and annuities? Nor the myriad of “nontraditional” investment products with questionable financial potential, inordinate risk and even higher loads? Or the onslaught of downright investment frauds that perennially prey on the elderly? A more skeptical mind might conclude that the CFPB’s assault on “senior designations” amounts to nothing more than punting on these more politically risky issues.