Insights from the experts in investment fiduciary responsibility.

Fiduciary Links: NASAA, SEC Tell Investors to Take Deeper Look at Advisor Titles

Posted by fi360 Team on September 30, 2013

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>>>Earlier this month, theSecurities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy and the North American Securities Administrators Association (NASAA) issued a joint bulletin explaining that financial designations and other titles can have vastly different standards for obtaining them. The bulletin urges investors to take a close look at the titles their advisors are using, understand how difficult they were to obtain, understand what they are meant to symbolize, ensure the advisor is actually authorized to use the title, and try to make a determination as to their value to the investor. This is a continuation of trend by regulators putting extra scrutiny on designations and titles to ensure they aren't being used to mislead investors, including FINRA's recently launched designations lookup tool and CFPB's study of the issue specifically as it relates to seniors.  

The bulletin directs investors to ask six key questions to better understand any financial designations being used by an advisor or other service provider: 

  • Who awarded your title?
  • What are the training, ethical, and other requirements to receive the title?
  • Did you have to take a course and pass a test?
  • Does the designation require a certain level of work experience or education?
  • To maintain the designation, are you required to take refresher courses?
  • How can I verify your standing with this organization?

Because we are in the designations business and many of you in our audience carry multiple designations, this is obviously an issue worth paying attention to. In fact, we are very supportive of these efforts to better educate investors and investment stewards about financial designations. Better yet, we believe better awareness regarding designations can be an opportunity for advisors to differentiate themselves. We'd recommend showing this bulletin to your clients and prospects, inform them of their duty to prudently evaluate and select service providers, and then proudly inform them of the specialization and effort your designations represent. To help with that conversation, we've even developed a series of support documents for the designations we are associated with that provide straightforward responses to these questions from NASAA and SEC (AIF, AIFA, PPC). By embracing this scrutiny and empowering your clients and prospects with the information they need, you can demonstrate that you are proud of the efforts you have taken to further your professional credentials. 

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