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From Banking and Finance Law Daily, April 18, 2013

CONSUMER FINANCIAL PROTECTION BUREAU—CFPB Recommends Adoption of Consistent Senior Advisor Designations

By Richard A. Roth, J.D.

Older Americans seeking financial advice face a bewildering array of more than 50 different certifications promising relevant expertise, according to a report from the Consumer Financial Protection Bureau. The various titles and acronyms, many of which are similar to one another, can make it difficult for senior citizens to judge an advisor’s education and expertise, the bureau said. The report, "Senior Designations for Financial Advisors: Reducing Consumer Confusion and Risks," includes recommendations for actions by Congress, the Securities and Exchange Commission, and state securities and insurance regulators.

There are more than 50 million American senior citizens and the number may grow to 70 million as the baby boom generation ages, CFPB Director Richard Cordray said. Senior citizens often are the specific targets of unfair or deceptive financial practices. They can, for several reasons, be vulnerable to fraud and can be "confused and misled" by the variety of titles. These designations can be earned through a broad variety of educational processes, from "a three-hour online course offered by a for-profit company to a two-year graduate degree from a reputable university," Cordray said.

Recommendations. The report recommends that the SEC consider creating a tool consumers could use to verify an advisor’s designations and understand what a designation actually means. The SEC also could create a way to record complaints and enforcement actions against advisors with senior designations, and perhaps could report the data it collects to certifying organizations. Congress and the SEC both could consider requiring advisors to provide disclosures that describe the significance of a designation, the report says.

A recommendation for policymakers more broadly is to consider establishing minimum standards for designations and prohibiting the use of designations issued by non-accredited organizations. The establishment of minimum standards of conduct for advisors also is offered as a possibility.

RegulatoryActivity: CFPB UDAAP

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