Lawrence Norris, 97, and his wife, Carol. enjoy lunch at the Senior Center… (David Pulliam / MCT )
WASHINGTON -- Older Americans can be confused by dozens of special designations for financial advisors for seniors, and government officials should set strict standards for training and conduct to prevent abuses, according to a federal report released Thursday.
The ranks of the elderly are projected grow to 70 million by 2030, and their savings can be an attractive target for people peddling financial products, said the Consumer Financial Protection Bureau, which studied "senior designations" at the request of Congress.
The potential for scams increases because there are no set standards for people portraying themselves as experts on the financial matters of senior citizens and the more than 50 designations they use often have similar sounding names, the report said.
“With such a bewildering array of titles and acronyms, it is no wonder that older Americans are confused and misled by these titles,” said Richard Cordray, the bureau's director.
"Seniors may assume a financial advisor has their best interest at heart when that is not necessarily the case," he said. "If they fall prey to a scam, they may be too embarrassed or frail to pursue legal action."
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The bureau noted that the designations used by tens of thousands of senior financial advisers can have dramatically different requirements.
For example, among the qualifications for an accredited estate planner is that a person be an attorney, accountant, insurance professional, financial planner or trust officer and complete two graduate-level courses.
But an accredited retirement advisor must only pass a 100-question, multiple-choice exam and receive 72 hours of continuing education every three years.
"When it comes to senior financial advisors, these specialty titles are anything but transparent," said Hubert "Skip" Humphrey III, head of the bureau's Office of Older Americans.
Oversight of advisors with senior designations is split between the Securities and Exchange Commission and state agencies, such as California's Department of Insurance.
The consumer bureau recommended that state and federal policymakers establish minimum training and education standards for senior-advisor designations, as well as minimum standards of conduct, such as prohibiting misleading advertising.
Regulators should increase supervision and enforcement of the industry, and the SEC should consider creating a "centralized tool" to allow consumers to verify a financial advisor's background, the report said.
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