Making Sense of Financial Professional Titles
Registration or Licensing Status of Financial Professionals
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 in more 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.
Use of Titles by Financial Professionals
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.
How to Check on the Financial Professional's Title
If a financial professional tells you that he or she has a certain professional title ask questions. Some include:
- Who awarded your title?
- What are the training, ethical, and other requirements to receive the title?
- Did you have to take a course and pass a test?
- Does the designation require a certain level of work experience or education?
- To maintain the designation, are you required to take refresher courses?
- How can I verify your standing with this organization?
Professional organizations also may offer information online about the titles that they grant. In some cases, the granting organization's website may allow you to verify that a person has earned a certain title. For example, the website of the Certified Financial Planner Board of Standards (www.cfp.net) allows visitors to search for CFP professionals to verify CFP certification
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 research about a broker's or investment adviser's professional qualifications, experience, education, and any disciplinary history call the Wyoming Compliance Division at 307.777.7370 or contact us via email at Compliance@wyo.govor visit the FINRA BrokerCheck at www.finra.org.
Source: The Securities and Exchange Commission's (SEC) Office of Investor Education and Advocacy