Practice Management

Regulators: Don’t get lost in the soup

NASAA, SEC issue note about titles used by financial advisers amid confusion.

Confusion over the alphabet soup of designations faced by investors has led the North American Securities Administrators Association and the Securities and Exchange Commission to issue a note about the plethora of titles used by financial advisers.

NASAA and the SEC make two key points in the joint bulletin issued last Wednesday: that financial professional designations and licenses aren’t the same, and that investors shouldn’t rely solely on a title to determine whether an adviser has the needed experience.

“We know there are a number of titles and designations out there, some legitimate and some not so,” said Bob Webster, NASAA’s director of communications. “We wanted to send out this notice just to give investors a quick resource to help them distinguish between the legitimate and illegitimate titles.”

In April, the Consumer Financial Protection Bureau submitted a report to Congress and the SEC that highlighted the dangers endemic in the proliferation of “senior designations.”

The report noted that some unscrupulous operators have taken advantage of elderly consumers by touting their qualifications and selling “inappropriate and sometimes fraudulent financial products and services.”

The NASAA-SEC bulletin also recommended that investors avoid relying on titles to determine whether an adviser has the requisite expertise, because many labels accredited by outside organizations are neither earned by merit nor provide a means of recourse in the event of problematic activity.

Investor resources

“While some private groups that grant titles may provide a method for you to complain about one of their members and can discipline a member for conduct, there are other groups that do not take complaints or discipline their members,” the report said.

The report concludes with a number of resources for investors to consult when judging the expertise of an adviser, including links to the Financial Industry Regulatory Authority Inc.’s descriptions of the education and experience requirements for certain titles, and databases that investors can use to confirm the legitimacy of designations used by advisers.