The invitation comes by mail or phone, or maybe via a poster in the community center. You're invited to a free "financial survival" seminar, run by someone who claims to specialize in retirement issues. Scrumptious lunch will be served. But what kind of expertise do these advisers actually have?
Most likely, they boast an alphabet soup of credentials — something like CEPC (for certified elder planning consultant) or perhaps CSP or ASP (chartered or accredited senior planner). Unfortunately, the vast majority of these designations are primarily marketing tools with little or no training behind them. The adviser might have purchased the title at the price of a weekend workshop. The designation might even be self-awarded. A study last year by the Consumer Financial Protection Bureau found more than 50 senior specialist titles on the market — a few requiring a year or two of hard work, the rest not much more than pieces of paper. "Alphabet soup does not necessarily make a good senior planner," says Deena Katz, cofounder of the Florida-based wealth management firm Evensky & Katz and associate professor of financial planning at Texas Tech University.
Advisers go for these titles because they project an image of knowledge and impartiality. Often, however, they mark someone peddling a high-commission product who may be misleading you about the costs and risks. Variable and fixed-indexed annuities are the "senior" investments most likely to be mis-sold, according to a 2012 survey of financial planners.
When looking for retirement advice, you don't need a "senior specialist" at all. You can get the answers you need from a certified financial planner (CFP) who trains in all aspects of financial counsel. Ideally, you want a fee-only CFP, who sells no products and charges only for advice. Another good set of initials is RIA — registered investment adviser.
A few of the senior designations do have rigorous academic work behind them, says Wade Pfau, a professor of retirement income at the American College in Bryn Mawr, Pa., which trains financial professionals. He thinks you can feel comfortable if your adviser's business card says that he or she is a certified retirement counselor (CRC), retirement income certified professional (RICP) or retirement management analyst (RMA). You're also good with a chartered advisor for senior living (CASL), whose focus includes broader issues such as health care and estate planning. The College for Financial Planning, which originated the CFP, offers the mark chartered retirement planning counselor (CRPC).
Even these titles, however, are frosting on the cake. You should be fine with a fee-only CFP. Any additional designations just deepen the knowledge that he or she has already acquired.
More than half the states have a law on the books restricting the use of self-serving or misleading senior designations. But the CFPB study found them largely ineffective. Consumers don't understand the various designations, many of which sound alike. There's no central information spot, no rating system for designations and little attention paid to the investment claims dished out with lunch.