Brokers question NASAA proposal to limit use of ‘advisor’ title
January 7, 2025 by Dan Shaw
The financial services industry has long recognized a distinction between advisors who collect fees for managing assets and brokers who charge commissions for carrying out securities transactions.
Still, firms and trade groups alike are speaking out against a proposed rule that would allow states to prohibit brokers from calling themselves “advisors” or “advisers” when working with retail investors. The proposal, put forward by the North American Securities Administrators Association in November, is generally meant to make clear the different business incentives that financial service professionals have in their dealings with clients.
Read the full story via Financial Planning
Wink’s Moore on the Market: Ohhhh! I always love debates on this topic.
Looks like NASAA proposed a rule “that would allow states to prohibit brokers from calling themselves ‘advisors’ or ‘advisers’ when working with retail investors.”
Here we go again.
“Advisors registered at the state level are held to the fiduciary obligation to always do what’s best for their customers.
Brokers, by contrast, are under a slightly weaker standard known as Regulation Best Interest, requiring them to look out for their clients’ best interests while also disclosing conflicts.”
NASAA believes “it is a deceptive and unethical practice for broker-dealers to mislead investors into believing the broker-dealers are acting in a fiduciary capacity with an ongoing duty of loyalty through misuse of the ‘advisor’ and ‘adviser’ title.”
Hmmm…wonder how they feel about life insurance agents using those monikers?
Problematic: “If states were to adopt their own individual bans on brokers designating themselves ‘advisors’ or ‘advisers,’ the result could be a bewildering regulatory patchwork,” said Mark Quinn with Cetera Financial Group.
Note- the SEC has issued guidance that “brokers” generally should not call themselves “advisors” when dealing with retail investors.
Let’s talk it out. Join in the LinkedIn discussion. -sjm
