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“Making Sense of Financial Professional Titles”

Following is an excerpt from an investor alert issued by the North American Securities Administrators Association:

“Financial professional titles and licenses are not the same. A financial professional may use various titles whether or not he or she is registered or licensed with a regulatory authority. Financial professionals that are registered as a broker-dealer or investment adviser have obtained registrations and licenses granted by federal or state regulatory authorities. Working with a financial professional who is registered with or licensed by federal or state authorities affords you certain legal protections.

The same financial professional may register inmore than one capacity. For example, many financial professionals register as both a registered representative with a broker-dealer firm and an investment adviser. Also, a financial professional selling some insurance products, such as variable annuities, may be regulated as both a registered representative of a broker-dealer and an insurance agent. Insurance agents are subject to state insurance laws and are regulated by state insurance regulators.

Do not rely solely on a title to determine whether a financial professional has the expertise that you need – find out what the title means and what the financial professional did to obtain it.

Some titles are granted by private organizations, such as a trade group. While some private groups that grant titles may provide a method for you to complain about one of their members and can discipline a member for misconduct, there are other groups that do not take complaints or discipline their members.

Still other titles may be simply purchased, or even made up by financial professionals hoping to imply that they have certain expertise or qualifications; such titles are generally marketing tools and are not granted by a regulator. As with any title, you should verify a financial professional is really qualified to advise you.

If a financial professional tells you that he or she has a certain professional title ask questions. Some questions you can ask include:

  1. Who awarded your title?

  2. What are the training, ethical, and other requirements to receive the title?

  3. Did you have to take a course and pass a test?

  4. Does the designation require a certain level of work experience or education?

  5. To maintain the designation, are you required to take refresher courses?

  6. How can I verify your standing with this organization?

…Even after checking, it may not be clear to you whether a title represents relevant expertise, a marketing tool, or something else. That’s why you should always check the financial professional’s background, rather than relying solely on the professional’s title.

To do your own online research about a broker’s or investment adviser’s professional qualifications, experience, education, and any disciplinary history, visit:

  1. The SEC’s Investment Adviser Public Disclosure website, or

  2. BrokerCheck, a website of FINRA, or

  3. Your state’s securities regulator can also provide all of this information to you and help you understand how to interpret the information. To find your state’s securities regulator, go to the NASAA website.

Key Questions You Should Consider Asking a Financial Professional About Financial Professional Titles:

Are you employed by a registered broker-dealer? If yes, use FINRA’s BrokerCheck website to find out about the financial professional’s qualifications, experience, education, and disciplinary history.

  1. Are you employed by a registered investment adviser? If yes, are you registered with a state securities regulator or the SEC? If the financial professional is registered with the SEC, use the SEC’s Investment Adviser Public Disclosure website to find out about the financial professional’s registrations, qualifications, experience, education, and disciplinary history.

  2. Are you or your firm registered with a state securities regulator? If so, contact that regulator to find out where you can find out about the financial professional’s registrations, qualifications, experience, education, and disciplinary history. A list of state securities regulators is available on the North American Securities Administrators Association website, here.

  3. Are you or your firm registered with any other state or federal regulator? If so, contact that regulator to find out about the financial professional’s registrations, qualifications, experience, education, and disciplinary history.

Questions regarding specific financial professional titles

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

  2. What are the training, ethical, and other requirements to receive the financial professional title?

  3. Did you have to take a course and take a test?

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

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

  6. Confirm any information the financial professional provides you regarding his or her financial professional title. This information may be available on the website of the organization that awards the financial professional title, or you may also check FINRA’s website page “Understanding Investment Professional Designations.”

  7. 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.”

To read the alert in it’s entirety, click the following link: http://www.nasaa.org/26029/making-sense-financial-professional-titles/

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