In a case of back to the future, senior designations are receiving regulatory attention after the new Consumer Financial Protection Bureau (CFPB) issued a scathing report criticizing their use. Designations for advisors who work the senior marketplace were the focus of reforms about five years ago, but CFPB believes more must be done.
“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. “(Our) 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.”
Starting in 2008, the North American Securities Administrators Association (NASAA) and the National Association of Insurance Commissioners (NAIC) adopted model rules that prohibited misleading use of senior-specific designations and that established minimum standards for designation-granting bodies. FINRA also issued a best practices report encouraging securities firms to better supervise their representatives’ use of senior designations. In the intervening years (as of June 2012), 28 states and the District of Columbia have adopted NASAA’s rule and 30 have adopted the NAIC’s.
Despite these efforts, CFPB is uncertain that such credentials are meaningful indicators of senior-market expertise. According to the agency:
- The names and acronyms of senior designations are still confusing to consumers. Titles and acronyms for the various designations often appear to be quite similar. Yet they have different required knowledge, certification procedures and continuing education requirements. What’s more, even though the designations seem to imply that advisors holding them are fiduciaries, just the opposite is true. Many are operating under a suitability standard supervised by FINRA or state insurance departments.
- There is a wide variety of required training, qualifying exams and oversight associated with various designations. Some may require rigorous college-level coursework, while others may be acquired by attending weekend seminars.
- There is a lack of comprehensive supervision and enforcement. According to CFPB, no single authority is responsible for ensuring that those who use senior designations do not mislead or harm consumers.