What’s in a name? There’s power in a name but according to the Consumer Financial Protection Bureau (CFPB) there’s also confusion if your name has anything to do with dozens of special designations for financial advisors who work specifically with seniors. The CFPB noted that while people 60 and over make up 15 percent of the population, they account for about 30 percent of investment fraud victims. The senior designation after names on business cards or other business correspondence is supposed to signify additional levels of professionalism and competence but the number and scope of those designations has ballooned in recent years and confuses the issue of their relevance or actual expertise. In an article in the business section of the Los Angeles Times, the agency noted that the more than 50 designations for people selling financial products may have requirements that are different but because the names sound similar, seniors become confused and it leaves them open to scams.
Individuals who work in the financial services industry may fall under governance by the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority or by state regulators, each of which have their own requirements for people who work with seniors. So for the sake of every individual looking to hire an advisor of any sort in the financial services industry, the consumer bureau recommended that state and federal policymakers establish minimum training and education standards and minimum standards of conduct in order to eliminate or at least reduce consumer confusion and opportunities for financial services fraud. The bureau also recommended that regulators should increase supervision and enforcement of the financial services industry and that the SEC should consider creating a centralized tool to enable consumers to verify the credentials of an advisor.
Examples of designations according to Investopedia:
Certified Senior Advisor-earned after three days of coursework
Certified Senior Consultant-earned after 25 to 30 hours of self-study plus three final exams
Certified Senior Specialist-the most extensive training of the senior designations but only covers a basic background on things like estate planning, annuities, government benefits, long-term care, reverse mortgages
Chartered Senior Financial Planner-three days of training with an open-book exam
There’s been enough concern over the designations that the state of Nebraska issued a statute prohibiting the use of senior advisory designations and the Investopedia article written over a year ago prophetically warns that while “bogus designations can fool prospects and clients at least for a while, regulators are certain to eventually rectify the situation, one way or another.”
Word of mouth is still the best way to begin searching for a trustworthy professional Clients should talk to anyone that has had experience with individual investors and get information on how long the other individual has worked with them, what their experience has been like and whether or not they’ve had any problems with them. Other sources of information might be an employer, local consumer groups or trade organizations. For instance, at AgingOptions we have partners through our Preferred Partner program that work within the financial industry. These individuals have received additional training on senior issues and can be found here.
State regulators can also be a helpful resource in pinning down a list of specific services. FINRA BrokerCheck can be useful for answering some specific questions about employment history, disciplinary problems etc. and can help detect potential red flags such as frequent moves for employees or name changes for firms. State securities regulators can often provide more details. A list of contact information is available on the website of the North American Association of Securities Administrators (NASAA) at http://www.nasaa.org/.
Beyond background checks, it is important to verify that any firm is a member of the Securities Investor Protection Corporation (SIPC). Originally created by Congress in 1970, SIPC protects investors from firms that have failed due to bankruptcy or financial difficulties and client assets are missing. SIPC does not offer investors protection from investment failures, bad stocks, bonds or other financial investments. It simply replaces missing stocks and other securities when possible.