(Corrects that CRPC designation is available from College for
Financial Planning, not the Certified Financial Planner Board of
By Suzanne Barlyn
NEW YORK May 2 Financial advisers may need to
be more careful then ever when using special "senior"
credentials to market themselves to older Americans after the
newest U.S. financial regulator took aim at those designations,
say compliance professionals.
New regulations could be coming if the Consumer Financial
Protection Bureau (CFPB) has it way. A report from the agency in
mid-April confirmed what investor advocates and other regulators
have long known: seniors are confused by the more than 50
designations financial advisers use to proclaim expertise in
giving advice to an older crowd.
At issue are credentials that require little or no training
but give consumers the impression that the adviser is well
versed in retirement planning and related subjects. Some 89
percent of brokerage firms allow their advisers to use senior
designations, though in most cases they must get prior approval
or choose from a pre-selected list of certifications.
That will mean ongoing scrutiny of practices among brokers
and their firms while multiple regulators discuss their next
moves, said Dan Bernstein, director of research and development
for MarketCounsel, a compliance consultancy in Englewood, New
The CFPB urged other regulators, including the U.S.
Securities and Exchange Commission, to rein in potential abuses
with new rules that would require mandatory disclosures and
minimum standards of conduct.
For brokerages, that means making sure their policies for
the designations are up to snuff, and for brokers it means
sticking to those rules.
The bureau cannot make those changes on its own, because its
reach extends only to limited types of financial advisers.
Advisers who sell securities remain subject to oversight by the
SEC, states, and the Financial Industry Regulatory Authority
(FINRA), Wall Street's industry-funded watchdog.
Some CFPB recommendations, such as a web-based tool through
which seniors can verify an adviser's designation, could require
a lengthy effort among multiple regulators. The SEC is looking
forward to reviewing the suggestions and continuing efforts with
other regulators to protect seniors, a spokesman said.
"If multiple regulators have their eyes on this issue then
it has to be important for firms to have robust procedures if
their brokers are allowed to use these designations," said Susan
Axelrod, FINRA's head of regulatory operations. Brokerages "must
be confident that they are not just a title meant to attract
investors or mislead them," Axelrod said.
POLICIES AND PROCEDURES
The CFPB, whose report was required by the Dodd Frank
financial reform law, is the latest regulator to weigh in on
senior designations after a series of measures by state, federal
and industry regulators.
More than 30 states have adopted a model rule developed by
the North American Securities Administrators Association, an
organization of state securities regulators. It prohibits
advisers from using senior designations that are misleading or
obtained from groups that do not have "reasonable standards" to
ensure, among other things, that people who obtain the
credential are competent.
Designation companies, to meet the state requirements, must
have their programs approved by one of two national
organizations that review business standards in various
In 2011, the Financial Industry Regulatory Authority (FINRA)
issued guidance to the securities industry about best practices
for senior designations. Roughly 68 percent of firms that
responded to a FINRA survey said they allow their brokers to use
senior designations. But most brokerages required brokers to use
designations pre-selected by the firm or to get prior approval
before promoting a designation.
Morgan Stanley, for example, allows brokers to choose
from three senior designations the brokerage pre-approved based
on factors such as the course work involved, a spokeswoman said.
Brokers at Wells Fargo Advisors, a unit of Wells Fargo & Co
may choose from five designations. They do not use the
word "senior" in their titles, but may use "retirement," a
Both firms' lists include the Chartered Retirement Planning
Counselor (CRPC). The accreditation, available through the
College for Financial Planning, requires roughly 30 hours of
instruction on everything from long-term care to retirement
cash-flow concerns. Candidates must score at least 80 percent on
a 90-question exam and attend 16 hours of continuing education
every two years, a spokesman said.
Some designations have less strenuous requirements,
including optional course work, according to a list from the
CFPB report. Some companies maintain websites that disclose
misconduct by advisers who hold their designations, while others
It is unclear how many of Wall Street's roughly 630,000
brokers use senior designations.
The SEC has also held seminars to educate seniors about the
CHECKING BUSINESS CARDS
The recent spotlight could spell trouble for brokers using
questionable designations behind their firms' backs or not
following their approval policies.
Brokerages often conduct surprise exams at their branch
offices to look at these issues among others, said Gerald Baker,
a compliance consultant in Kewadin, Michigan. Compliance staff
may ask for copies of brokers' business cards or letterhead to
see which designations appear, Baker said. They may also review
how brokers' listings appear in telephone directories and on the
Internet, Baker said.
Breaking the rules is a big risk with little reward, said
Michael Byrnes, a business and marketing consultant in Kingston,
Massachusetts who works with advisers. He points out that having
the wrong senior designation could get a broker in trouble
without even winning any new clients.
(Reporting by Suzanne Barlyn; Editing by Linda Stern and Chizu