The North American Securities Administrators Association (NASAA) put out an investor advisory on Tuesday, reminding investors about the different types of financial advisors in the U.S., which adhere to different standards of care.
NASAA issued an investor advisory setting out basic information on the different types of financial services professionals and their differing obligations to investors. For example, in the U.S., licensed investment advisors are required, by law, to act as fiduciaries and put the interests of their clients ahead of their own. Whereas, broker dealers are only obliged to adhere to a suitability standard.
“With so many brokers and salesmen calling themselves ‘financial advisers’, or ‘investment consultants’, it is easy to see how investors might assume these individuals are licensed investment advisors,” said Heath Abshure, NASAA’s president and Arkansas securities commissioner. “That’s one reason why NASAA continues to call on federal securities regulators to require all financial professionals providing investment advice to retail investors to be held to a high fiduciary standard.”
In Canada, securities regulators are considering several of the same issues, including whether a statutory fiduciary duty should be imposed on advisors, and the investor confusion created by unregulated job titles.
“Whether you are just starting a retirement fund or need additional help with growing and managing your money, you may benefit from selecting an investment services professional. It pays to understand the differences between a broker-dealer agent, an investment adviser representative, and a financial planner. Each serves a distinct role in helping with your financial future,” Abshure said.