The Committee for the Fiduciary Standard asked SEC Chairman Jay Clayton in a letter to prohibit broker-dealers from using titles and terms in advertising that mislead consumers into believing they are getting advice from a fiduciary.

Specifically, the committee, with 1,100 investment advisors as members, asked Clayton to ban brokers from using the title “investment advisor” and to require brokers to use the title “broker” or “salesperson.”

The comments are included in a missive the committee sent to Clayton that even goes as far as spelling out specific language advisors want the SEC to adopt to limit misleading titles and advertising in order to clear up consumer confusion.

The committee is also asking the SEC to require dual-registered representatives to choose whether they are a salesperson or an investment advisor.

“Call yourself what you are and if aren’t going to be a fiduciary and act in a client’s best interests, you’re a salesperson or a broker and that’s what you should call yourself,” Patricia Houlihan, chairperson of The Committee for the Fiduciary Standard, told Financial Advisor. Houlihan said the group wanted to get out in front of the message because of Clayton’s expressed willingness to address titles in a fiduciary proposal expected from the SEC in the second quarter.

Not shying away from controversy, the group called out Merrill Lynch, Goldman Sachs and UBS as examples of companies that use misleading website advertising to infer their reps are investment advisors. The advertisements, obtained  December 17 to 22 by the committee, state that the firms’ salespeople put investors’ interests “first” and offer “advice,” when in fact their brokers are held only to a suitability standard, are not registered as investment advisors and do not abide by a “best interest” or fiduciary standard, the group said.

The group is urging “the SEC to consider the issue of misleading titles and advertising, as part of its deliberations regarding when and where fiduciary duty should apply,” according to the letter sent to Clayton.

In the letter the committee asked Clayton to adopt the following “Use of Titles Policy:”
“Extensive research has demonstrated that consumers are easily mislead by the multitude of titles utilized in the financial services industry. We recognize that there are two important but distinct and useful service offerings to the general public – brokers subject to the ’34 Act and investment advisors subject to the ’40 Act.

“We believe commission-based sales activities serve important client needs and give investors options for how they wish to conduct their investment activities. Whether commissioned brokers provide investment ideas or execute trades, we support that they be permitted to pursue their business activities, so long as they are clear about their roles. ... Specifically, we recommend that the Commission require that any title they use clearly denote their role as salespersons. Titles can range from 'salesperson' to 'broker' but may not include terms that suggest a level of advice beyond that of stimulating the sale of product.

“Registered investment advisors are paid fees for their personalized advice and may use titles such as Advisor, Financial Advisor, Wealth Manager or Financial Planner.”

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