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May 18, 2011 at 06:07 AM
Adviser or advisor, does it really matter how it’s spelled? The two are interchangeable, and either spelling denotes in a client’s mind that they are owed a fiduciary duty, some advisors argue. Yet, wirehouses may be craftily using one spelling so that their advisors can circumvent fiduciary obligation.
The Investment Advisers Act of 1940 uses adviser with an “er,” yet the handful of advisors that I polled said that using an “or” is just fine too. Ron Rhoades, director of research for Joseph Capital Management, says that today, the word is typically spelled with “or.” His firm, he says, calls itself “a registered investment advisory firm, simply so that my clients don’t think that I’m making a typo.” If he were to spell advisor with “er,” “clients and prospective clients are probably thinking that I can’t spell.”
Scott Bell, CEO of Gross Domestic Product Inc., which specializes in personal finance and investing, agrees that typically, RIAs use “advisor,” despite the fact that the Advisers Act uses “er”. The two spellings, he says. “have gotten casually intermixed.” Says Bell: “The truth of the matter is, either [spelling] is proper, but if you wanted to pin it down to the legal definition, it’s with an ‘er,’ that’s why you’ll never see a business card from a wirehouse broker ever say financial advisor with an ‘er’ unless it’s on the private wealth side, and then they are calling themselves investment advisors because they are operating in a more closed fiduciary responsibility” relationship.
Yet another advisor who emailed me said that when she created her firm in 2008 she decided to use “adviser” because that’s AP style—both she and her partner are former journalists–because that’s the way the Securities and Exchange Commission spells adviser under the Adviser Act. But, she maintains, “as far as I am concerned, there is no legal distinction between the two spellings.”
