Older Americans

We’re excited to host a twitter chat about older Americans and money on May 9, 2013 from 3-4 p.m. EDT.

We’ll have financial experts taking questions on what older Americans can do to find out if their financial advisers are really experts in their needs.

JOIN THE CONVERSATION

To participate, tweet questions with the hashtag #SeniorMoney and follow us @CFPB.

When it comes to choosing a financial adviser, you should work with an adviser you trust because he or she can help you make important financial decisions. It can be hard to know who has the real expertise—especially for seniors. Over the past year, we have been reviewing the credentials used by financial advisers who imply that they specialize in giving advice to seniors.

Today, we released a report on these so-called “senior designations.”

When it comes to these specialty titles, they are anything but transparent. In fact, we found that many consumers don’t understand basic differences between brokers, investment advisers, insurance agents, and financial planners—let alone the 50 plus senior designations that many of those financial advisers add to their titles!

As you shop for financial advice or products, ask yourself: Is my adviser really an expert in my needs?

Not all financial professionals with titles like “retirement adviser” and “senior specialist” are qualified to help you manage your money. Some of these titles require in-depth training, while others aren’t much more than window dressing. Here are three things to think about when evaluating a financial adviser’s senior designation:

• Is there considerable training required? Senior financial planning is a complex field, which includes topics like estate planning, income tax laws, and investments. Some senior designations therefore require college-level coursework and passing tough exams, which can take many months or even years to complete.

• Is your adviser designated through a program that holds its members to strict ethical standards? You should be able to file a complaint easily with the organization that issued your adviser’s senior designation, as they may discipline or ban members who don’t follow the rules.

• Is your adviser’s senior designation accredited? Accredited programs have taken important steps to ensure the quality of their training.

Most financial advisers are well trained, reputable professionals. But credentials alone don’t guarantee expertise or the quality of someone’s training. It’s up to you to find out what a particular title means.

Most professionals using senior designations are licensed or regulated. You can check their background using these resources:

• Broker Check allows you to look up the professional background of securities brokers and investment advisers, as well as their firms.

• The Investment Adviser Public Disclosure allows you to access information, such as services and fees, on investment adviser firms and individual representatives.

• If your adviser sells insurance, your state insurance commissioner may offer additional information.

• If your adviser sells securities, your state securities regulator may offer additional information.

To learn more about our work on senior designations, read our report.

In the brief time since I started here at the CFPB, we have accomplished an amazing amount for older Americans. The time has flown by at jet speed. Among other things, we’ve:

Increased the focus on issues affecting seniors, including in particular elder financial exploitation and diminished capacity for financial decision-making.

• Helped the Bureau produce and publish a congressionally mandated study and report on reverse mortgages. To help people assess their own needs when making decisions about reverse mortgages, we produced an accompanying consumer guide.

• Established working relationships with nonprofit organizations, financial institutions, state attorneys general, and our federal partners on the Elder Justice Coordinating Council, including HHS, the SEC, the FTC, and DOJ.

But there is a lot still to come. Over the next few months we’ll also release the results of some long-term efforts:

• A plain language guide for lay fiduciaries who are managing an elder’s finances, and another for the staff of congregate living facilities to spot elder abuse, both of which will be released this summer. These guides will help lay people with fiduciary duties understand what’s required of them, and help nursing home and other congregate care staff spot and help to prevent elder abuse;

• A Money Smart for Older Adults module – expected out before summer – that we developed with the FDIC as part of the FDIC’s highly successful Money Smart curriculum. This module will provide training on how seniors can protect themselves against financial exploitation and scams;

• Recommendations and a report to Congress and the SEC regarding the use of senior certifications and designations by financial advisors to help ensure that seniors understand what these credentials mean when they’re seeking financial advice.

During the many years I have enjoyed working in public service and furthering the public interest – from my time as a Minnesota state legislator forty years ago to the work I do now at the CFPB – I have gotten to know many people and organizations throughout America: companies that provide financial services, public and private organizations, and law enforcement. I’ve seen these relationships and experiences help the elders of our nation be more economically secure and independent.

Our work for America’s seniors will only succeed if the relationships we’ve begun succeed. They deserve particular focus. After an incredible term as the Assistant Director for Older Americans, I am transitioning to a new position: Senior Liaison Officer. My work will focus more closely on collaborating and working with organizations that work with consumers throughout the country. I will continue to travel the country to meet with consumers, policy makers, advocates, and both public and private agencies to talk about how we address the myriad problems facing older consumers today.

I’m looking forward to focusing on building strong, dynamic relationships to share research, develop projects and programs, and create tools that will support sound financial decision-making by seniors as they enjoy their later years. Our work will help to protect more seniors from the scams and financial abuse that steal their retirement and later life savings.

This is going to mean a little less time in Washington and a little more time in Minnesota where all of my family lives. Just as so many seniors desire, I will be better able to share in the growth and maturing of the Humphrey family while continuing my commitment to the good people of this nation as I continue my work with the CFPB. I’ll also be working closely with my Deputy, Stacy Canan, to help the Bureau find the next Assistant Director for Older Americans (if you want to receive updates on our process, please let us know).

So, stay tuned! I’ll be sending updates from time to time from places all across the USA!

This post is part of a series for National Consumer Protection Week

National Consumer Protection Week is an opportunity to talk about a particularly troubling and challenging consumer protection issue – elder financial abuse and exploitation. Understanding what elder financial exploitation can look like and why it can be hard to spot can help you protect yourself, your loved ones, or someone you care for who may be at risk for this kind of abuse. We’ll tell you what the Bureau is doing to combat elder financial abuse.

Over the past couple of months, we’ve heard about several cases that vividly illustrate the challenges we face in working to prevent elder financial exploitation.

In one case, a former in-home caregiver and her husband who were indicted in Georgia for allegedly defrauding an elderly veteran with dementia out of about $182,000. More charges are expected, and police say the couple took about $500,000 from the 80-year-old man.

In another case, a handyman convinced an elderly woman to give him power of attorney. He took out a reverse mortgage on the home which the woman had owned since the 1950s, and she never saw any of the money. She almost lost her home due to the scam.

We also heard a troubling story about how the CEO and CFO of a California investment firm were charged with 66 felony counts of elder abuse, securities fraud, and conspiracy for bilking older investors of more than $2.3 million over an eight-year period.

The Government Accountability Office report on combatting elder financial abuse identified cases that are particularly thorny for social service, criminal justice, and consumer protection agencies. These cases involve exploitation by in-home caregivers, agents with power of attorney, and financial service providers—exactly the kinds of cases mentioned above. These cases also demonstrate why family members or others who have close contact with older adults can play an important role in spotting and preventing elder financial abuse and exploitation.

At the inaugural meeting of the Elder Justice Coordinating Council last fall, we heard concerns that echo what the GAO reported. We shared those concerns with Congress shortly after the report came out. We also detailed the work our Office for Older Americans is doing to combat some of these problems. We are:

• Developing guides for family members and others with legal authority to handle money for older relatives or friends, but who may not have formal training. The guides will help people understand proper record keeping, good frameworks for investing, and other basics of managing a vulnerable adult’s money. They also will help people recognize and respond to financial exploitation.
• Producing a guide for people who operate group living centers dedicated to serving older adults, such as nursing homes or assisted living facilities. We are also establishing partnerships with organizations to help distribute this information.
• Partnering with the FDIC to create Money Smart for Older Adults, a community education and training program for older adults and for caregivers.
• Coordinating with stakeholders in several states to create and sustain multi-disciplinary older American protection networks. We are also developing strategies to communicate that the Gramm-Leach-Bliley Act generally does not prohibit companies from reporting suspected elder financial exploitation. For many of them, this is often a point of confusion.

You can get more details on these and other federal efforts by reading what we said to Congress last November.

If you have your own experience with elder financial exploitation or confusing information on how to recognize or respond to it, please tell us your story. You can also learn more about preventing elder financial exploitation and abuse in your community.

Today, along with the Federal Trade Commission (FTC), our Office of Enforcement sent letters to a number of lenders concerning potential violations of the Mortgage Acts and Practices – Advertising (MAP) Rule, a new rule that took effect in August 2011. The MAP Rule addresses claims and statements in mortgage advertising that may be misleading to consumers.

Many of these potentially misleading practices seem to be directed at older Americans and servicemembers/veterans. So today we are writing jointly to highlight things to be on the lookout for when you get mortgage advertisements. We have seen examples of the following potentially misleading practices through our complaint system, and also heard about them as we travel the country talking to consumers.

Be suspicious of ads with:

• Official-looking seals or logos that imply some kind of government status, for example making you think they come from the VA or HUD. Although government agencies do guarantee some loans, they are not involved in the actual lending or advertising of loans.
• Promises of amazingly low rates – which may turn out in the fine print only be in effect for a short period and then will readjust to a higher amount.
• Promises that a reverse mortgage will let you stay in your home payment-free. Typically borrowers with reverse mortgages still have to keep up with tax and insurance payments – and will most likely lose their homes if they don’t.
• Announcements of “pre-approval” and large amounts of cash or credit available to you. Typically there’s no guarantee that you will be approved for a loan, or the size of the loan, until you go through a standard qualification process.

You know the old saying: “If it sounds too good to be true, it probably is.” Some advertisers will use your military or veteran status as a way to approach you, promising special deals or implying VA approval. Others will use the lure of a “no-payment” reverse mortgage to troll for older Americans desperate to find a way to stay in their home when they can no longer afford a mortgage payment. And although mortgage rates are very low right now, an offer promising “historically low rates” may still have hidden traps that turn it into a bad deal.

So please, be cautious. If you get an ad that sounds a little (or a lot) too good to be true, you should get more information from a trusted source before you respond to the offer. The FTC has published a consumer alert on deceptive mortgage ads and what to look for. We also have more information about mortgages and other financial products on our website at Ask CFPB, as well as specific information for veterans and older Americans. Take the time to know before you owe!

Yesterday, I testified in front of Congress about the work we’re doing for older Americans and wanted to share directly with you what we’re up to, as well. This work is incredibly important to me – and our Office for Older Americans as a team is thrilled to be getting to work on what has silently become an epidemic – elder financial abuse.

If you have a story we should hear, make sure to tell your story today.

For the past year, I have been privileged to lead the Office for Older Americans. Our statutory mandate covers two broad areas:

• protecting consumers over 62 in the financial marketplace; and
• enhancing their later-life economic security.

In our first year, we have made preventing, detecting and redressing elder financial exploitation job number one.

In doing so, we have recognized that collaboration is critical — on the local, state and national levels, and between the public and private sectors. To jumpstart and foster these collaborative efforts, we have travelled throughout the country to meet with state, local and tribal officials, including attorneys general, financial regulators, adult protective services administrators, commissioners on aging, chief justices, court administrators, and tribal elders.

We have also engaged with non-profits, community organizations and industry groups to explore ways to help and to partner with them. For example, we participate in a working group with the Financial Services Roundtable to enhance the capacity of financial institutions to report suspected elder financial abuse.

In addition, we have been actively engaged with our federal partners. Last month was the inaugural meeting of the Elder Justice Coordinating Council, an 11-agency body convened to shine a light on the disastrous impact of financial exploitation and catalyze the development of a prevention strategy.

At the meeting, we heard important themes from national experts:

• Older Americans are victimized by a broad range of perpetrators.
• Collaboration is critical.
• Diminished capacity is the 800-pound gorilla in the room.
• We need more and better quality data.
• And we need a broad-scale public education campaign to raise awareness of elder financial abuse and what to do about it.

CFPB already has initiatives underway that address issues flagged at the Council meeting.

• We are developing “how-to” guides for agents under powers of attorney, guardians, trustees, Social Security representative payees, and V-A fiduciaries.
• We are producing a guide to help senior housing, assisted living, and skilled nursing facilities identify and intervene in exploitation cases.
• Our Money Smart for Older Adults education program, in collaboration with the FDIC, will focus on preventing, recognizing, and reporting elder financial exploitation.
• We are working in several states to create and sustain coalitions for community education, public awareness, enhanced response, and increased prosecution.
• And we are developing strategies for communicating to financial institutions that the Gramm-Leach-Bliley Act generally does not prohibit them from reporting suspected abuse to law enforcement and APS agencies.

Congressional leadership and support is critical to implementing a multi-faceted solution to the serious problem of elder financial exploitation. We look forward to continued information sharing with members of Congress on this important topic and the CFPB’s contributions.