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Fiduciary groups urge SEC to prevent brokers from using 'adviser' title
InvestmentNews; Jan 12, 2018 @ 3:57 pm
Fiduciary advocates are urging the Securities and Exchange Commission to prohibit brokers from calling themselves "financial advisers," as the agency considers a regulation that would raise investment advice standards.
One of the biggest sources of investor confusion stems from the nomenclature that brokers use to describe themselves, the Committee for the Fiduciary Standard wrote in a comment letter on Friday.
When brokers hold themselves out as a "financial adviser" or "wealth manager" and when they advertise that they provide financial advice, it misleads investors, the committee said.
"[W]e recommend that the Commission require that any title they use clearly denote their role as salespersons," the committee letter states. "Titles can range from 'salesperson' to 'broker' but may not include terms that suggest a level of advice beyond that of stimulating the sale of a product."
Investment advisers, who must register with the SEC, are held to a fiduciary standard that requires them to act in the best interests of their clients.
Brokers, who register with the Financial Industry Regulatory Authority Inc., are held to a suitability standard that requires them to sell products that meet an investor's objective and risk tolerance. But the standard also allows brokers to recommend investments that produce the highest revenue for the broker as long as the other elements of the standard are met.