Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
July 23, 2019 at 03:42 PM
As examination of the Securities and Exchange Commission’s Regulation Best Interest continues, industry attorneys are directing broker-dealers and dually registered advisors on how to proceed when it comes to using the terms “adviser” and “advisor.”
Eversheds Sutherland attorneys write in a recent alert that Reg BI effectively prohibits a broker-dealer and its associated persons from using the term “adviser” or “advisor” if the broker-dealer is not a registered investment advisor or the associated person is not a supervised person of an RIA.
In light of this restriction, the attorneys state that dual registrants or standalone broker-dealers who currently permit their associated persons to use the term adviser or advisor in their designation “will likely have to revisit this practice if their associated persons are not also registered as an, or supervised by a registered, investment adviser.”
Moreover, the attorneys say, “a standalone broker-dealer whose business name includes the term adviser or advisor will likely have to consider a change in its name.”
BD firms “might also want to consider designations for their associated persons that appear in marketing collateral, such as websites, account agreements, marketing materials and associated-person stationery,” the attorneys advise.
Gail Bernstein, general counsel for the Investment Adviser Association, told ThinkAdvisor on Tuesday that the SEC states in Reg BI that it’s also “going to watch the marketing tactics of broker-dealers so that they don’t mislead.”
IAA is concerned, however, that “when you read with the solely incidental interpretation, which is more a little more expansive than we would have hoped, it would allow brokers to do some ongoing monitoring without having to register as advisors,” she said.
Bernstein added: “Potentially, if the solely incidental interpretation is construed broadly to allow brokers to do ongoing monitoring, that may undermine the efforts in Reg BI to limit their activities and limit their marketing.”
