Consumer Financial Protection Board Weighs In On Senior Advisor Designations; Says SEC, States, And Other Lawmakers Must Act Hot

The CFPB could turn out to be an agency with little power. It doesn't have the staff to police the securities industry and it's difficult to to know if the Securities and Exchange Commission, state regulators, or other regulators of the financial services industry will act on its recommendations. This report shows that the agency can study an issue and come up with some pretty obvious conclusions, but we'll have to see if it has the political capital to get anything done and whether it wants to spend that capital addressing issues that financial advice professionals care about. 

Some of the reports recommendations, which start on page 48, and some highlights are clipped below:

• The SEC may wish to consider establishing a centralized tool through which senior investors can verify a financial adviser’s designations.
   
• The SEC may wish to consider establishing a mechanism to capture complaints and enforcement actions against senior designation holders and consider reporting the data to designation providers consistent with and to the extent allowed by the Commission’s legal obligations.
   
• The SEC may wish to consider establishing a mechanism to capture complaints and enforcement actions against senior designation holders and consider reporting the data to designation providers consistent with and to the extent allowed by the Commission’s legal obligations.
   
• The Bureau found that the use of senior designations is extremely confusing for consumers. There are more than 50 different senior designations currently used in today’s marketplace with senior designees recommending or selling a variety of products, such as securities, investment opportunities, financial products.
   
• The titles and acronyms for the different designations are often similar or nearly identical to other designations, making it difficult for consumers to distinguish between different The use of senior designations is extremely confusing for consumers.
   
• Every senior designation is different, and there is a very wide range in their characteristics. For example, there are differences regarding training requirements, qualifying examinations, continuing education requirements, oversight by the conferring organization, complaint procedures for aggrieved clients, and accreditation. Moreover, the presence, depth and rigor of these components vary widely among designations.
   
• Rigorous training standards for the approved use of senior designations would reduce risks to consumers. If state and federal regulators imposed rigorous criteria for acquiring senior designations, including specific standards for qualifying prerequisites, education, training, and accreditation, consumers would likely encounter fewer designations, and those offered would require a consistent and a high-level of training and oversight. Rigorous standards of conduct for those using senior designations would reduce risks to consumers. If state and federal regulators set minimum standards for the conduct of senior designation holders, consumers would experience a more predictable, consumer-oriented market when shopping for senior financial expertise.

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