Investment or Financial Professional Titles: Making Sense of It All
(Originally published December 1, 2015) By Paul L. Vorndran
Deciding upon whom to trust to deliver accurate and fair advice is an investor’s first difficult decision. In the investment world, a number of titles may be used by a professional offering various investments. But most of these are marketing tools issued by various organizations, and are not officially granted by a regulator. For example, a person holding him or herself out as a ‘Certified Financial Planner’ may have obtained permission from the Certified Financial Planner Board of Standards to claim the designation. This designation does not, however, mean that the individual has been licensed to sell or advise concerning securities. There are many of these types of designations offered by a variety of organizations. The Financial Industry Regulatory Authority (FINRA) provides an extensive list of these titles, their abbreviations and the requirements necessary to obtain them here.
Understanding these distinctions can aid the investor in deciding what advice or recommendation to accept. An individual recommending only annuities may be licensed by the appropriate state Insurance Commissioner to do so, but if that individual is not also licensed by a state Securities Commissioner he cannot recommend and sell mutual funds. If the annuities are not appropriate for the investor but mutual fund investments are, the particular individual is not the proper financial adviser. This situation is one of many that pits the investor’s best interest against the financial adviser’s pecuniary interest to earn commissions selling only what he is licensed to sell.
An excellent discussion on this topic can be found on the North American Securities Administrators Association (NASAA) website here.
This communication is provided for your information only and is not intended to constitute legal advice or legal opinion as to any particular situation. You should not take, or refrain from taking, any action based on information in this article, without seeking legal counsel from an attorney on your particular facts and circumstances. Jones & Keller would be happy to provide you with specific advice about particular situations, if desired. Do not hesitate to contact us.