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SEC Notice Warns Investors About Financial Titles of Advisers

The designations used by financial advisers can confuse even the most sophisticated investor, let alone individuals with little knowledge about financial products or investing. This confusion has led the Securities and Exchange Commission (SEC) and the North American Securities Administrators Association to issue an investor notice about the myriad of financial titles circulating today.

The joint bulletin, which was released yesterday, stressed that financial professional designations and licenses are not the same and that investors should never rely solely on a title to determine whether a financial professional has the expertise they need.

Indeed, some financial titles can simply be purchased or even made up by financial professionals who hope to imply that they have certain expertise or qualifications, says NASAA. In most cases, such titles are generally marketing tools and not granted by a regulator.

Earlier this year, the Consumer Financial Protection Bureau released a report focusing on the proliferation of “senior designations.” The report stated that some financial professionals had taken advantage of elderly consumers by using senior qualifications and selling “inappropriate and sometimes fraudulent financial products and services.”

The SEC/NASAA bulletin offers a number of questions that investors can ask to determine whether a financial adviser has the expertise he or she is touting. Among the questions and recommendations:

What is the name of the organization that awards the financial professional title?

What training, ethical, and other requirements were performed to receive the financial professional title?

Did you have to take a course and a test?

Does the financial professional title require a certain level of work or educational experience?

To maintain the financial professional title, are you required to attend periodic continuing education courses?

The notice also suggests that investors confirm any information provided by the financial professional about his or her financial professional title.  This information may be available on the Web site of the organization that awards the financial professional title. Investors also can check the Web site of the Financial Industry Regulatory Authority (FINRA) and the “Understanding Investment Professional Designations” section.

Finally, the notice encourages investors to contact the organization issuing the financial title to confirm that the financial professional is currently authorized to use the title and to determine if they have any disciplinary history.


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