Be Wary of 'Senior' Financial Advisors

Regulators say they are not what they claim to be.

You’d think a “senior” financial advisor or one who claims to hold a designation touting expertise with “seniors” would be an obvious choice to assist you if you’re a retiree, right?

Not so fast.

The Consumer Financial Protection Bureau is investigating financial advisors’ use of “senior” designations as part of an overall mandate to study and then recommend to the SEC and Congress ways to improve the quality of financial advice given to seniors.

The CFPB notes that there are more than 50 different senior designations used by those who sell a wide variety of financial and insurance products to senior citizens. It warns that these designations can be “extremely confusing for consumers.”

That’s because unsuspecting consumers might not understand what these designations convey. While some demonstrate that an advisor has passed a test or completed coursework pertaining to elder issues, others are available merely by paying a fee or subscribing to a publication. Continuing education may or may not be required, and there’s no assurance that a “senior” advisor actually has any particular proficiency or expertise.

Instead, the designation might be something used by a salesperson selling annuities or other high-commission products to help the agent convince prospects to buy.

Therefore, when looking at an advisor’s credentials, don’t be overly impressed by the alphabet soup that might appear on a business card.

The majority of financial advisors are ethical, but designations alone don’t guarantee anyone’s financial expertise or quality of training. That’s why we don’t emphasize them at our firm (although all our advisors have them — I have six myself — you won’t see them displayed on our business cards).

If you’re considering the advice of someone claiming to be an advisor, review my list of 18 questions to ask; you’ll find them in Part 13 of The Truth About Money.

Originally published in Inside Personal Finance September 2013

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