U.S. securities regulators published a bulletin on Wednesday that aims to help investors navigate the wide range of titles used by financial advisors.
The U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy and the North American Securities Administrators Association (NASAA) issued a joint bulletin highlighting the confusing, unregulated nature of professional titles — an issue that has long been flagged by investor advocates in Canada too.
The regulators’ bulletin notes that the requirements for obtaining and using titles in the financial industry varies widely, “from rigorous to nothing at all”. Moreover, the SEC and NASAA don’t regulate the use of particular titles, it says.
It counsels that working with registered advisors at least provides certain legal protections, and suggests that investors should not rely on a title to determine whether a financial professional has the necessary expertise.
“Find out what the title means and what the financial professional did to obtain it,” it says, and sets out certain questions for investors to ask in order to investigate the merits of specific titles. Additionally, it says that investors should research advisors’ professional qualifications, experience, education, and any disciplinary history through regulators’ websites.
In Canada, the Investment Industry Regulatory Organization of Canada (IIROC) is developing guidance on the use of titles and financial designations, which will deal with the responsibility of dealers and reps concerning the use of titles, including best practices for supervising the use of titles with retail clients. That guidance is expected to be published in March 2014.