The consumer watchdog on Thursday called for tougher oversight of the credentials that financial advisers use to show they are trained to work with older Americans.
The Consumer Financial Protection Bureau said these financial advisers use more than 50 different credentials, some of which they can simply buy online.
Continue Reading Below
This creates a confusing array of titles that leaves older Americans vulnerable to abuse, the CFPB's report said. It noted that it is often impossible to distinguish between the titles, which do not clearly indicate what training advisers received and which are not overseen by a single regulator.
"A senior choosing between an Accredited Retirement Advisor and an Accredited Estate Planner will likely do so without knowing which one is required to have five years of experience and some graduate level education and which is not," CFPB Director Richard Cordray said.
The report calls for state and federal regulators to require tougher training before people can obtain designations to work with seniors and to set standards of conduct for advisers who claim those certifications.
Congress created the consumer bureau as part of the 2010 Dodd-Frank law and gave it oversight of products such as mortgages, student loans and credit cards.
Through its office of older Americans, the bureau has been looking at the problems retired people face in managing their finances.
As part of Dodd-Frank, Congress told the CFPB to look into special titles that identify financial professionals as having expertise or training to work with older people.
The bureau found that a variety of financial professionals, including investment advisers, broker-dealers, accountants and insurance agents, obtain such titles. CFPB officials said they believe tens of thousands of people use these titles.
They may be overseen by the U.S. Securities and Exchange Commission (SEC), the self-regulatory Financial Industry Regulatory Authority or by state regulators, which do not all have uniform requirements for people who work with seniors. The bureau itself has limited authority over this issue, CFPB officials said.
That can mean seniors misjudge the training their advisers have received. Even some industry professionals reported confusion about what the various designations indicate, CFPB officials said on Thursday.
Confusion about designations also can open seniors up to worse abuses, the bureau said.
For example, some designated advisers hold events that are billed as educational seminars for older people but actually are held to sell investment products and other services, the report said.
Cordray said seniors and people with elderly parents need more transparency. He said his own father is 95 years old.
"He should not have to fend off unscrupulous advisers who are trying to raid the life savings of seniors," Cordray said.
In addition to pushing for tougher standards for designations, the report calls for the SEC to create a tool consumers could use to verify credentials and determine what training their financial adviser completed to receive it.
The CFPB used research from other regulatory agencies, as well as information gathered from roundtable sessions with financial planners, insurance and securities industry experts, consumer advocates and others, the report said.
(Reporting By Emily Stephenson; Editing by Chizu Nomiyama)