The Certified Financial Planner Board of Standards, Inc. is calling on the new U.S. Consumer Financial Protection Bureau (CFPB) to create a ratings system for financial certifications and designations.
In a comment letter to the CFPB, the CFP Board reports that there are more than 140 designations currently in use in the delivery of financial services. And, it is concerned that senior investors are particularly vulnerable to confusion about professional designations.
It notes that financial designations vary significantly and investors have no meaningful way of comparing them, and it says there’s no consistent oversight of these designations. So, it recommends that the CFPB establish a rating system to evaluate and rank designations.
It also urged the CFPB to support legislative and regulatory reforms to protect older investors, including encouraging policies that support the delivery of financial advice under a fiduciary standard; reforms that would require those who work with seniors to meet baseline competency and ethical standards; and, reforms to address the use of misleading titles, such as those who hold themselves out as financial planners without meeting any competency or ethical requirements.
In support of its recommendations, the CFP Board also reported that results of a survey of more than 2,600 CFPs, which found that more than half of them report working with an older client who has been subject to unfair, deceptive or abusive practices in the delivery of financial advice or the sale of financial products. Another 32% knows of an older non-client who has been subject to such practices, it notes. And, yet, they estimated that only 5% of those victims reported the abuse.
The survey also found that 74% were aware of older investors who have been offered unsuitable financial products; 58% were aware of older investors who have been subject to omission of material facts about financial products; and, 48% knew of older investors who have been subject to misrepresentations about financial products. The financial products involved in unfair, deceptive or abusive practice most often involved equity indexed or variable annuities, variable life insurance, mutual funds, and universal or whole life insurance, it said.
“This survey reveals the pervasive financial abuse victimizing America’s seniors,” said CFP Board CEO, Kevin Keller. “CFP Board applauds the Consumer Financial Protection Bureau for its focus on this problem and urges the Bureau to take prompt action to reduce the use of misleading certifications and designations and to work with other federal and state regulators on legislative and regulatory policies to protect older Americans.”
The survey was administered online from July 24 through August 7, and has a margin of error of 1.9% with a confidence level of 95%.