Hubert Humphrey’s Remarks for Release of the Senior Designations for Financial Advisers Report and Recommendations

Thank you, Director Cordray,

Today I’m pleased to tell you some more about what we’ve been doing at the Bureau to help America’s seniors lead safer, more productive financial lives. One of the objectives of our work is to ensure that markets for consumer financial products and services are fair and transparent.

Over the past year, my office has been reviewing so-called “senior designations.” These are credentials financial advisers acquire to imply or indicate that they have special expertise in providing financial advice to seniors.

When it comes to senior financial advisers, these specialty titles are anything but transparent. In fact, we found that many consumers don’t always understand the differences between different types of financial professionals, like brokers and investment advisers, let alone the 50 plus senior designations that many of those financial advisers add to their titles!

In our report, we propose the following policy recommendations that we believe will help reduce consumer confusion and better protect older consumers:

    1. We recommend that the SEC consider establishing a centralized tool that makes it easy for seniors to verify their financial adviser’s designation. There are already several good resources to help consumers verify the background of their financial adviser, or to learn more about professional credentials in general. But these resources weren’t designed to make it easy for seniors to verify a specific adviser’s senior designation and to compare different designations.
    2.We are also recommending that Congress and SEC consider requiring financial advisers using senior designations to provide their clients with information that will enable the clients to verify their adviser’s credentials.

As Director Cordray noted, senior designations are used by a variety of financial professionals covered by federal and state regulation. Many states already have laws that prohibit the misleading use of senior designations. However, as we state in the report, policymakers with jurisdiction over these professionals may wish to take some additional steps, including:

    3. Establishing minimum standards for acquiring senior designations. Standards could include a minimum amount of training and education, as well as accreditation requirements;
    4. Establishing minimum standards of conduct for those who hold senior designations. This could include prohibiting, in states without existing laws, the misleading use of senior designations, and misleading advertising; and
    5. Increasing use of existing supervision and enforcement authority to penalize and deter the misuse of senior designations.

Summary:

We believe adoption of these recommendations will help older consumers avoid financial advisers who would misuse their designations to sell inappropriate investment and financial products.