‘O’ No! Ken Fisher Tells SEC to Ban Use of ‘Advisor’

In rewriting advice rules for brokers, the Securities and Exchange Commission should “ban entirely” their use of the term “advisor,” and require those who work within the financial services profession to “accurately describe their role,” said Ken Fisher, founder and CEO of Fisher Investments.

In his July 31 comment letter to the agency on its three-pronged advice standards package, Fisher argues that the brokerage and advisory businesses “need clear, separate words to describe them,” as was intended by the Securities Exchange Act of 1934 governing brokers and the Investment Advisers Act of 1940.

Fisher argues that the word “advisor” should be “banned entirely,” as “requiring actors within the financial services industry to accurately describe their role is common sense and good public policy.”

Over the last few decades, Fisher told the Commission, “brokers have intentionally blurred these [advisor/broker] distinctions by calling themselves ‘advisors’ and by offering more and more investment advice. The result is investor confusion.”

(Related: Why Ken Fisher Hates Annuities)

In separate comments to ThinkAdvisor on Monday, Fisher said that “adviser” reflects the use of the term in the Advisers Act, while advisor with an “o,” was introduced by brokers “as a way to get around the original ban on using the word ‘adviser.’”

Said Fisher: “I remember a time very well when the ‘o’ didn’t exist at all, and Series 7 registered folks couldn’t call themselves ‘advisers’ and were banned from that. The ‘o’ was just part of the flim-flam to get around that.”

Through “broker pressure and common media misusage  much of the industry, your publication included, fell hook, line and sinker for the ‘o’,” Fisher said. (ThinkAdvisor contains the content of Investment Advisor magazine.)

Fisher states in his comment letter to the SEC that while it is important for brokers to operate under “standards of conduct that protect investors, any further blurring, even if called ‘harmonization’ or branded with another catchy slogan, will only magnify the problem.”

(Related: Worried About Broker Conflicts? The SEC Isn’t)

Instead, he argued, the financial advice industry needs “’disharmonization’”—“clear, bright, red lines so investors know exactly what they are getting. Advisers versus Advisors language is a start.”

In particular, Fisher continues, “prohibiting brokers and their representatives from calling themselves ‘advisers’ or ‘advisors’ is a good first step.”

But he still doesn’t think it goes far enough.

The Commission should “rule that only investment advisers not also registered as brokers are permitted to call themselves ‘advisers.’”