The Securities and Exchange Commission and state securities regulators are warning investors to not rely solely on a financial professional’s title to determine whether the person has the expertise they need.
In a joint Investor Bulletin, released Wednesday, the SEC and the North American Securities Administrators Association warn investors to ensure that they are working with a financial professional who is registered or licensed by federal or state authorities, as it affords investors “certain legal protections.”
The bulletin explains that 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,” the bulletin states.
The bulletin goes on to explain that some titles are granted by private organizations, such as a trade group. “While some private groups that grant titles may provide a method for the investor 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,” the bulletin states.
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.”