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Telling the Difference Among 50 ‘Senior’ Financial Credentials

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Say you're a 70-year-old retiree, and you'd like some help managing your finances. Should you hire an adviser who is an A.R.A., an A.R.P.C., a C.S.A. or a C.R.F.A.?

Good luck figuring what any of that means. Right now, older Americans looking for financial guidance encounter professionals using a bewildering array of letters after their names. There are more than 50 "senior certification" designations now in use, according to a new report from the Consumer Financial Protection Bureau's Office of Older Americans.

Those abbreviations, by the way, are Accredited Retirement Advisor, Accredited Retirement Plan Consultant, Certified Senior Advisor and Certified Retirement Financial Advisor.

The designations are meant to persuade potential clients that the adviser is an expert in helping older people with their financial decisions, but requirements for obtaining the various designations vary widely. The alphabet soup is confusing, and can leave older adults more vulnerable to bad advice and even outright fraud, the report says.

So the bureau on Thursday made a half-dozen recommendations to federal and state regulators and policy makers to help make it easier for older people to verify an adviser's credentials and to compare different credentials.

The bureau, for instance, recommends that the Securities and Exchange Commission establish a centralized tool for the elderly to verify a specific adviser's designation and to compare information about different designations. The report suggests the tool could build upon resources already available, like the commission's Investment Adviser Public Disclosure, which offers investors online access to registration documents and background information on thousands of registered investment advisers.

In addition, the bureau suggests that Congress and securities regulators require that financial advisers explain their credentials to their clients.

Further, the bureau recommends that regulators at the federal and state level set minimum standards for education and experience required for senior designations. Currently, some credentials require a specific level of coursework, but others don't require any.

In a conference call with reporters, bureau employees estimated that "tens of thousands" of professionals, including financial advisers, brokers and insurance agents, use some sort of senior credential.

The bureau's representatives declined to single out any specific designation as being particularly helpful for seniors who are looking for advisers, and said the bureau had no goal in mind for reducing the number of designations in use. But they said that if the bureau's recommendations were acted on, the number of designations should dwindle and the ones remaining be more meaningful.

Older Americans are often the target of financial fraud, in part because they may have money they have saved for retirement, and also because cognitive decline may make them more vulnerable. Americans over 60 make up 15 percent of the population, but are estimated to account for 30 percent of investment fraud victims, the report notes.

Plus, studies have found that older people may be more likely to rely on recommendations from an adviser with a "senior" credential.

Acting on the bureau's recommendations can help reduce confusion and better protect older people as they seek to manage their finances, said Skip Humphrey, assistant director of the Office of Older Americans.

Have you hired an adviser using a "senior" expertise credential? Was it a factor in your decision to work with that adviser?