Alert April 30, 2013

CFPB Releases Report on “Senior Designations” for Financial Advisers

The CFPB released a report on “senior designations” for financial advisers, which are credentials acquired by a variety of financial advisers and professionals to signify that they have special expertise in providing financial advice to seniors. The Dodd Frank Act requires the CFPB’s Office of Financial Protection for Older Americans to make recommendations to Congress and the SEC on, among other things, best practices for methods in which a senior can verify a financial adviser’s credentials. As detailed in the report, the CFPB found that the training requirements and quality control among senior designations is lacking. For example, the CFPB noted that there are more than 50 senior designations currently used all with a variety of training and requirements. The CFPB also noted that professionals who use senior designations are subject to varying regulatory regimes (e.g., the SEC, FINRA, and various state securities regulators) and there are no uniform rules for providing financial advice, services and products to seniors. The report makes recommendations to address dissemination of information to consumers and recommendations to address consumer confusion around senior designations and consumer protection. In particular, the report recommends that the SEC establish a centralized tool that would make it easy for seniors to verify and compare their financial advisers’ designations. The report also recommended that policymakers provide minimum standards of conduct for persons holding a senior designation (e.g., prohibitions on misleading use of certifications and setting standards for advertisements and customer communications).