AMA12-5-13With taglines like “Can you afford to die?” and “How will you spend your retirement?” financial planning programs aimed at older investors appear everywhere, promising peace of mind and security – for a price. But, as the Consumer Federal Protection Bureau reports, all too often these “financial advisors” targeting seniors with money to spare have no credentials at all.

According to a recent Reuters report on the issue, “financial advisors” use around 50 different titles, many of them claiming to show expertise in niche areas such as retirement planning or asset management. But because there’s no national standard for financial advising, individuals claiming those titles may have undergone training and professional qualifying – or they may have bought the title on the Internet.

The lack of oversight and regulation of the field of financial advising has the CFPB and other consumer watchdogs concerned, especially since many of those claiming to be financial advisors or money managers are targeting a population that’s historically been especially vulnerable to a variety of abuses and schemes: older individuals with money to spare.

Professional organizations for financial advisors, such as the National Association for Personal Financial Advisors, the Financial Management Association and the Association or Financial Professionals establish criteria for membership and vouch for the professionalism of their members. And other organizations for niche markets such as estate planning and investing attempt to do the same. But membership in these organizations is entirely voluntary, and it’s possible to call oneself a financial advisor without having any financial background or training whatsoever.

That’s what worries the consumer advocates and elder fraud specialists, who monitor the proliferation of financial advising seminars, targeted mailings and other kinds of promotion targeting older investors who may take what an advisor says on faith without checking out the individual’s background and credentials.

And the confusing array of titles and functions can be especially confusing for seniors worried about investing for retirement, protecting assets for their heirs, and covering expenses like assisted living or nursing home care. It’s a situation ripe for exploitation, says the CFPB, which is calling for tighter standards for individuals claiming to be professional financial advisors, especially in the senior financial marketplace.

Eldercare and consumer advocates are also encouraging more efforts to educate senior consumers of financial services about the pitfalls of putting savings and investment money into the hands of advisors without a thorough investigation. But they warn that the potential for fraud and other abuses is widespread.

Professional financial advisors – or planners, or managers – play vastly different roles in helping investors of all ages manage their assets. But the overall lack of regulation in a wide and diverse field leaves vulnerable individuals at risk for losing money to scammers taking advantage of the absence of oversight.

As Jason Hartman says in his “Ten Commandments for Successful Investing,” it’s important to choose the right advisors to carry out an investing plan – and that means staying aware and informed about the sprawling field of financial advising and the professional – and not so professional — people working in it. (Top image: Flickr/SqueakyMarmot)

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